Financially Preparing for Layoffs
3 Things that helped us prepare for financial stress
We don’t always know when a financially devastating event may occur, we only know that we need to prepare, but how? I am hoping you find this article before things go amiss and it can help you take steps in the right direction.
Let me paint a picture of why this topic is important for me. My parents live with me. They immigrated when I was just a baby. My mom left her career, and my dad is legally blind and his pay is dependent on gigs. We have been US citizens for a while, but one thing is for sure at some point I will be my parents caretaker. They haven’t been irresponsible with money or raising me. In fact, they have done and continue to do the best they can.
My partner has a high paying job that we will be ok with however, I never like living on the edge. Who does? I worry about the many things that can go amiss. Because of my worries, here are some things we, my partner and I, have done over the years to prepare for this moment.
Emergency Fund
Everyone has heard the advice of saving 3–6 months of expenses. It is one of the most important thing you can do to feel some semblance of “everything will be fine for at least x months.” I forget where I heard it but the saying goes “wealth isn’t about how much you have, but how long it lasts.”
One Player
Trying to build an emergency fund while laid off is going to be difficult. If that is you, my advice is to focus on finding a source of income and making sure you have enough to pay your bills. Cancel any subscriptions or memberships that you do not need at the moment.
If you still have a job and your income allows for it, start saving immediately. If you can only do a dollar a month, then do that. Yes, this advise sounds silly but it is about creating a habit. My mom always says “El que guarda, siempre tiene” which translates to “whoever saves, always has.” You can find High yield savings account, that will help that dollar grow over time.
Two Players
There are a couple (pun intended) ways to go about it. Both of you can sit down and talk about some amount to put into a savings account each month. It does not have to be a lot. Like the one player strategy, it can be one dollar a week, or month. In addition, you can live on one income: one income for bills and the other to savings. I would suggest living on the income of the lowest earner. We actually realized the second strategy a little late, but we are starting to do that now. This way we learn to live a little more frugal than what we have been.
If you are in a position where you can invest, then investing your savings might be an option to explore as well. I cannot recommend one way or the other as that is a personal choice between you and your partner
Pay off Debt
If you search “Should I pay off my house” you will get many arguments for both sides. However, this isn’t the debt I am talking about, I am talking about credit card debt, or other consumer debt you may have. I personally enjoy the idea of not owing anybody money. For me it is just a matter of piece of mind.
I can’t advise on student loans or car loans. My student loan was the size of an ant, and I chose to buy my car outright after the lease ended. I knew in advance that I was going to buy the car, so for 3 years I saved quite a lot in order to buy my car.
People usually talk about tax advantages or how you can effectively make more in the stock market. They may be right. However, for me, it is about the peace of not owing money to anyone. So when it comes to cars and homes sit down and think about how you feel about these debts.
Budget
I understand nobody likes doing it, or you probably have one and your income just isn’t cutting it. Either way it is extremely helpful to write down where your money is going. Most people view budgeting as a way to keep up with monthly or annual bills. While that is true a budget also includes going out to eat, shopping, and splurges. It is YOUR budget, pay your bills but also make room for the things that bring you enjoyment.
Conclusion
Not everyone has the ability to take giant steps in short amount of time. Not everyone has the chance to take small steps. I wish I could solve all the problems of the world that lead to less than ideal situations. The least I can do is cheer you on as you try and remind you to enjoy slices of life along the way. Hopefully one day I can do much more good.
