Here's how Laid off Employees Should Make the Most of Their Savings
Unemployment benefits and savings for financial strength
Tech giants such as Google, Microsoft, Meta, and Nike have announced massive layoffs in the past couple of years, making it difficult for employees to survive and plan their expenses. As those who have lost jobs scramble for new opportunities, Michele Evermore, a senior fellow at The Century Foundation said, “Job loss is extremely traumatic, but it is important to remember that it is not the end of the world”. Here are some of the ways to make the most of your financial resources in the absence of a steady income.
Evaluate severance pay
Severance pay is the final settlement that an employee receives for some period until he finds a new job. Not just the salary, but benefits such as health policy may also be included in this amount. This can not just help you during your unemployment but will also make sure that you do not touch your savings amount. Cathy Curtis, founder and CEO of Curtis Financial Planning further says, “If the person was fortunate enough to get a severance package, they can draw on that first”.
Balance your budget
An employee who has just suffered a corporate layoff is sure to have problems with the monthly budget since salary is discontinued. But one must not lose hope and modify one's monthly budget by cutting off unnecessary expenses such as dining out and travel. Everyone who is living on their own is aware of their exact monthly expenses and therefore employees must stick to that budget without moving above it until they have a good job offer in their hand. Make a stabilized financial budget considering severance pay and do not spend all your savings right away.
Apply for unemployment benefits
Unemployment benefits are availed by employees who have been laid off or lost a job without any reason. They include cash benefits and it may take time for some states to approve an unemployment claim, hence it's better to file for them sooner. The first thing an employee must do after getting laid off is visit the state employment application site and apply. The benefits are said to be received within 21 days after your application and most states pay the benefits for 26 weeks. Employees can apply if they have not been rehired, once they run out of the amount received as part of the severance package.
Figure out which savings to tap into
Any smart corporate employee has an emergency fund in case things go haywire. The funds invested in a retirement account usually yield high benefits and are pretty easy to access. You can also try to sell the securities that are at a loss and sidestep the capital gains. If the employee finds no solution and is incurring penalties on payments, it is the last best option. Don’t just break your retirement savings as it disrupts the compounding growth of retirement savings. Tap those funds at the end if you don’t have anything left to liquidate.