How to Manage Money After a Layoff (From Someone Who Survived One)

When I was laid off from my first post-grad job, I had no idea how to best handle it. On top of the sting of rejection (which often comes even though layoffs are, by their nature, not about performance), I had to figure out how I was going to manage my money without my only source of income.

It was a scary time. But there are steps you can take to successfully manage your finances after a layoff.

Figure out how long your severance package will last

One of the best things about having to endure a layoff is that you may at least get a severance package to tide you over, and that’s typically based on how long you’ve worked at the company.

Before you do anything else, it’s vital to figure out how to make that money go as far as possible.

That means revisiting your monthly expenses, cutting unnecessary costs, and calculating how long your severance package will last based on this bare-minimum budget.

If you have an emergency fund in a savings account, you should consider only tapping into those funds if your severance package runs out before you’re able to secure another job. Remember: This is your worst-case scenario plan, so it should exclude potential income from side hustles or unemployment.

Consider your health insurance options

Being caught up in a layoff, unfortunately, usually also means losing your health insurance. And, depending on your current health status, that may be anything from a minor inconvenience to a serious problem. There are a few options here.

First, thanks to the Consolidated Omnibus Budget Reconciliation Act (COBRA), you do have the right to continue with your existing health insurance plan for a limited time if:

• You had a group health plan that was sponsored by employer
• There were 20 or more employees covered by that plan

However, this can be an expensive option, as it requires you to pay up to 102% of the cost of the plan. Remember, your former employer will no longer be covering any portion of those costs.

Your second option is to look for a plan via the health insurance marketplace. Those plans can be significantly cheaper than COBRA plans, and you’d have the option to choose between several coverage levels: Bronze, Silver, Gold, and Platinum.

Because you were laid off, you can also choose a catastrophic plan, which is the cheapest premium option and offers more limited coverage than the other plans. Whatever you choose, make sure you factor in the cost to your severance package spending plan, and that you can afford to actually use the coverage, if needed.

File for unemployment (if you qualify)

Depending on where you live, you may qualify for unemployment after a layoff as long as it happened through no fault of your own, you are able to work, and you will be actively seeking employment while receiving benefits.

In that case, you should file for unemployment ASAP. That’s because these claims can take two to three weeks to process, and there is often a waiting period after approval to start receiving funds.

The compensation also varies from state to state, so you’ll need to review your location’s standards to understand how much you can expect to get, and how long that can last. After all, that will have a major impact on your personal finances while you look for employment.

For example, if you live in Oregon, the weekly benefit amount is 1.25% of the total wages in your base period (subject to a weekly minimum of $151, and a maximum of $648). Benefits max out at 26 weeks.

So if you earned $70,000 a year, and worked at the company for at least the first three quarters of the year, 1.25% of your base period wages would be $656.25. That means you’d be subject to the weekly maximum and could get up to $2,592 per month, assuming a four-week month.

Layoffs can do a number on your finances. But if you plan ahead for the most important costs and take advantage of the resources available to you, you’ll have more time and energy to look for your next job.

Alert: our top-rated cash back card now has 0% intro APR until 2025

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a lengthy 0% intro APR period, a cash back rate of up to 5%, and all somehow for no annual fee! Click here to read our full review for free and apply in just 2 minutes.