By Emily Clements, in Parade, featuring Vincent Birardi, CFP®, AIF®, Senior Wealth Advisor
Layoffs can trigger financial panic, but having a clear plan can help protect your savings and future goals.
Financial experts agree that getting laid off can trigger a wave of financial anxiety. And according to Vincent Birardi, CFP®, AIF®, MBA, MSIS, Senior Wealth Advisor at Halbert Hargrove, the most important thing you can do to manage that stress is to avoid making rushed decisions. “Losing your job can be a psychological jolt,” Birardi tells Parade. “It’s imperative that you don’t succumb to any overwhelmingly and hopefully short-term negative emotions.” Instead, he recommends focusing on these five financial steps.
Key Takeaways
- Start by understanding your cash flow. Review your budget, reduce non-essential spending, and focus on preserving resources while evaluating your next steps.
- Claim available benefits as soon as possible. Filing for unemployment, reviewing severance packages, and understanding workplace benefits can provide valuable financial support.
- Use emergency savings strategically. Emergency funds are designed for situations like job loss and may help you avoid relying on high-interest credit card debt.
- Protect long-term retirement assets when possible. Avoid withdrawing from a 401(k) unless absolutely necessary, as retirement savings are intended to support future financial security.
- Stay focused on long-term goals rather than short-term fear. Thoughtful decision-making and a clear financial plan can help reduce stress and improve outcomes during periods of uncertainty.
1. Review Your Budget and Cut Non-Essential Spending
Your first move should be understanding exactly where your money is going. Birardi suggests postponing major purchases, luxury items, and expensive vacations while you search for your next opportunity. “Reaffirm your monthly household spending budget,” he says. “Identify essential spending—housing, food, etc.—from non-essential spending.” The goal is to align your spending with your available cash flow and preserve savings for essential needs.
