How to Financially Prepare Yourself from Unexpected Layoff?

It's upsetting, but it's real: Layoffs can happen in any job in today's fast-paced and unpredictable job market. Whether a company is restructuring, or there is an economic downturn, or trends are changing in the industry, losing your job can happen when you least expect it. While lay-offs are unpredictable, you always have a chance to prepare yourself for such unforeseen circumstances.

This blog will provide you with tangible steps to insulate your finances and at least rest assured, no matter what happens in the future.

1. Create & Sustain to Emergency Fund

   Get emergency fund is your best defence during any financial crisis, including being laid off. Every day, life highly depends on money, and you would not want to feel broke in any situation.

   
   

   How much money should you save up?

   Aim to save a minimum of 3 to 6 months' worth of living expenses. This should cover things like rent/mortgage, monthly utility bills, groceries, insurance, and debt payments.
   

   How to save money?

   1. Set up an automatic transfer to a savings account. You can do it weekly, bi-weekly or monthly.

   2. Create a savings account and treat savings like a recurring bill.

      
      

2. Track & Prioritize your Expenses

   Knowing exactly where your money goes is crucial if you suddenly lose your income.
   

   Start with a budget audit:

   1. List all your monthly expenses, such as rent, groceries, utilities, and subscriptions. Also, track your expenses to identify your real-time money spending habits.

   2. Divide your expenses into two groups, like 1. Primary expenses and 2. Secondary expenses.

   3. Cut your spendings like subscriptions not in use, impulse buying and binge dining out for your better financial health. This preparation work ensures that, if a layoff happens, you can immediately switch to a “survival mode” budget.
      

3. Diversify your Income Streams

   Relying solely on one job for your income is a risk you are taking. Hence, consider creating multiple income streams as soon as possible, even if they’re small.
   

   Such side hustle ideas are listed below:

   1. Freelancing or consulting on the side

   2. Renting out a room or property (if possible)

   3. Monetizing hobbies (writing, design, tutoring, etc.)

   4. Passive income, like dividends or online products These can help cushion the financial blow during unemployment.
      

4. Try to Pay Off Debt

   Layoffs don’t pause your loan payments. That’s why it's important to manage debt proactively:

   1. Pay down high-interest debts while you’re still employed.

   2. Avoid taking on new unnecessary debt, especially if your job feels unstable.

   3. Know your lender’s policies—some offer forbearance or flexible payment options in case of income loss.

      In an emergency, keeping your debt manageable will give you more breathing room.
      

5. Update your Resume and Network Regularly

   Staying job-ready can reduce the time you are unemployed. It helps you avoid deep financial stress. The faster you can land another job, the less you’ll need to dip into your emergency savings.

   How to prepare?

   1. Updating your resume and LinkedIn profile every few months.

   2. Building and maintaining professional relationships.

   3. Participating in industry groups, workshops, or seminars.

      
      

6. Know your Unemployment Benefits

   If you’re laid off, you may be eligible for severance pay or unemployment benefits.

   1. Review your employment contract or HR policies.

   2. Learn how to apply for unemployment in your region.

   3. Know your rights under labour laws regarding layoffs, final pay, and benefits.
      

      Having this information ahead of time saves stress and delays when time is of the essence.
      

7. Delay Major Purchases in Time of Uncertainty

   If your industry is volatile or there are rumours of downsizing, it might be wise to:

   1. Delay buying a new car or home.

   2. Hold off on large discretionary purchases.

   3. Postpone expensive vacations.

      Keeping your financial obligations minimal gives you more flexibility if your income were to suddenly stop.
      

8. Invest in Upskilling

   While you are employed, invest in career growth and skills development. Upskilling can make you more capable of the upcoming job trends. It also reduces your time of being unemployed if you're laid off.

   
   

   You can:

   1. Take online courses.

   2. Learn new software or tools in your industry.

   3. Get certifications to enhance your resume.
      

9. Talk to a Financial Advisor

   If you're confused about where to start or how to get financial backup, speaking with a financial advisor can help.
   

   A financial advisor can help you with several plans:

   1. Help you build a layoff-resistant financial plan.

   2. Offer investment and savings advice.

   3. Tailor recommendations based on your lifestyle and career.

Conclusion

When you stay financially prepared for any unexpected layoff, you are not only protecting yourself against a layoff, but also against other unexpected events. Staying prepared for unforeseen emergencies is a life skill everyone should have.

By building an emergency fund, paying off your debt, diversifying income, and staying professionally agile, you empower yourself to face layoffs with confidence rather than fear.

Always keep in mind that job loss is a temporary situation that may pass with time. But, it’s your preparation and smart financial work that is gonna safeguard you against any worse condition. *This article is for informational purposes only and does not constitute financial advice. Borrow responsibly.