Are You Prepared to Lose Your Job?
How okay would you be financially if you were to lose your job today? That is the poignant question posed by Lifehacker in a recent post.
No matter how secure you may think your job is, it could end tomorrow unexpectedly. If it does, are you prepared for this emergency? Or, would you not only be panicked but also find yourself screwed financially if it happened to you?
I can remember a few years ago when Merck first did their mass layoffs. I would sit in the hallways and listen to co-workers absolutely paralyzed with fear about losing their jobs. I had the same experience in the previous two companies I worked at where layoffs were a factor. Here were truckloads of employees, middle managers, and directors stressed to the max because they were so stretched financially that a short-term loss of employment would force them to sell their house and other assets. I don’t know about you, but I don’t EVER want to be so stretched financially that if I were to be without an income for several months or so that I would literally have to sell my shelter (my home) out from beneath my feet.
About.com has a good article in their Financial Planning section on this very topic. In the article they offer good advice.
- Be prepared but not paranoid
- Determine where you stand financially
- Know your employer’s benefits and policies as they relate to severance and layoffs
- Establish an emergency fund
You can read their complete article on their website to hear their full take on these points. I would like to add some of my own personal experience on these items.
Preparation is key. Being prepared is knowing the facts and having a plan and then letting go. Being paranoid is living in a constant state of worry and fear. You want to be prepared and then forget about it. Being paranoid is no way to live and will only result in you latching on even tighter to your employer in a futile attempt to control the uncontrollable.
Their second point – know where you stand financially – is fine advice period, regardless of your employment status. Ignorance is not bliss. Quite frankly not knowing where you stand is a recipe for ongoing stress and being up a creek without a paddle when life’s unexpected moments come knocking on your door.
Every employer has their own rules regarding employment and severance. For instance, when you’re terminated you will get paid in cash for certain time off you were entitled to but did not take. However, some time-off is not compensated. For instance, placed I have worked will pay out for unused vacation time but not for unused sick, personal, or floating holiday time. Know what’s what and then use your time and benefits accordingly to maximize the benefit to you.
Emergency funds are always critical. While professional advice varies, the rule of thumb is to have at least 3-6 months of money socked away in an accessible, liquid account equal to your necessary expenses for that time period. Necessary expenses are those fixed expenses you have to pay to live whether you are earning money or not (things like rent, mortgage, insurance, food, etc.).
Be your own best friend financially and make sure that if the unexpected happens and you lose your job tomorrow you won’t lose your shirt.
I’m not only prepared, I’m looking forward to it. Ha! (Work is overrated.)
Love this post. This is something I have been thinking about lately. I have started making sure that I am prepared if it happens. Now, the main part is getting rid of the worry that it might happen.
Found this post from the Carnival of Debt Management, which I participated in as well. Just wanted to say that you make some very good points. Many people seem to be living above their means and are paycheck to paycheck.
Keith, with proper preparation I think you will find the worry begins to disappear. When you know you can make it X months without a job, it is much less stressful if something should happen.