Recently, there has been a surge of companies making job cuts. Industries previously hiring are now letting go of people, sometimes in the thousands. Organizations within the technology field, including giants like Facebook, are terminating employees.
Many people dread the thought of losing their primary income source. Some households live paycheck to paycheck, making job loss financially devastating. The impact of income loss on single-income households is more than in double-income homes.
Some individuals who face job cuts are good workers, meaning no one is indispensable. How do you prepare for the reality of today's job market? What can you do to be financially prepared?
Step 1: Set Up An Emergency Fund
Life is unpredictable. The job market is no longer guaranteed. Setting up an emergency fund is, therefore, a critical task.
Your emergency fund value depends on your type of household. Single-income households should aim for six months of expenses as they have no fallback in case of job loss. Double-income households should have a minimum of three months of expenses.
Try to keep the emergency fund in a financial vehicle that is easy to access. The returns should be higher than inflation to hedge against the loss of value of money over time.
Step 2: Broaden Your Skills
Work on widening the range of your skills to those you can tap into, even away from a formal environment. Digital skills that transcend industries can be a financial life-saver at the point of job loss. You can focus on general foundational ones before specializing.
Linking your formal education with digital skills can create an additional or alternative source of income. For example, a medical doctor can learn blogging. The combination can prove to be a source of income from associated brands.
Someone else could learn how to build e-commerce stores and set up online stores for organizations within their industry. Their experience in the sector can prove to be the key to income generation as people may feel they understand their needs. Formal education and digital skills do not have to be exclusive.
Step 3: Minimize Your Lifestyle
You can minimize your lifestyle as you take note of the happenings at your workplace regarding the possibility of losing your job. Prepare as though you are facing a financial storm. The mindset can help you stretch how long your emergency fund lasts.
Consider budget areas like food in the context of eating out. Think through your subscriptions and see what you can do without. If renting, do you need all that space?
Your decisions will determine how long you can last as you look for alternative income sources. The stress of losing a job is hard enough without adding thoughts of how to survive money-wise. Minimize the issues to grapple with in case of income loss.
Mental Preparation
It is mentally challenging to lose a job. Feelings of shame and regret may engulf you. Your self-esteem may take a beating.
Lean into your support system. Grieve if you have to. Don't keep off your networks.
Give yourself time to process your emotions but with a deadline to avoid going into a depressive state. Keeping busy regardless of income can help keep you mentally stable. Above all, remember that your value as a human being goes beyond having a job.
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