A Layoff Can Help You Create a Fool-Proof Financial Plan - Really

If you’ve recently been laid off, as someone shared in response to last week’s post, and your emotions are still raw, you may want to read this later.

It may be hard to imagine, but in some cases a layoff can actually be a good thing for your personal finances.

This is not as heretic as it may sound.

The employment landscape has changed significantly in the last 40 years. Yet, our collective expectations around how we work in terms of the employer/employee relationship hasn’t really evolved to match today’s reality – on both sides of the equation.

If it did, all employees would be emotionally and financially prepared for the possibility of a layoff. They’d have multiple streams of income. Or, at least have a “just-in-case” financial plan if conflicts of interest prevent you from having a side-hustle. Do you?

If it did, all employers would realize you can only cost-cut your way to growth but so much. At some point, innovation is needed. Do you work at a company where ideas are embraced from all levels of the company; where failure is not avoided; where “innovation” isn’t a buzz word but rather it is seen as tool for broader, strategic goals?

The unlikely reason a layoff can inspire a fool-proof financial plan is this: it can foster a fresh start and better way to manage your money.

In three specific ways:

Review the last twelve months of your banking and credit card statements.

Not to beat yourself up about what you did or didn’t do prior to your layoff, but to isolate patterns of financial behavior and choices and notice what’s been in front of you all along. Doing this is important because you will discover if you were operating at profit (income greater than expenses) or a loss (expenses greater than income) or breaking even before the layoff.

If you don’t have an accurate accounting of what was going on before the layoff, how can you strategically make adjustments during your transition?

A layoff will inspire you to pay more attention to details you may have previously dismissed.

Renegotiate interest

If you carry credit card balances, now is not the time to have getting out of debt as your primary goal. Sounds like a crazy suggestion, right?!

A better use of your focus, energy and resources would be to ensure your monthly payments are chipping away at your principal. So if it’s been more than three months since you last looked at your current APR, a) look to see what it is, and b) call to request a lower interest rate. If your request is not immediately granted, ask about the parameters for reevaluation. Then, be sure to take those steps so your request can be honored the next time you ask.

The goal isn’t to reduce the amount you pay each month, it is to have more of your monthly payment applied to your outstanding principal. (By the way, this technique can really be applied to any type of debt.)

A layoff will inspire you to be proactive in areas where you either felt you had no influence. Or, dare I say, where you just were being lazy.

Remember, “reset” isn’t a bad word

Yes, a layoff can leave you feeling unmoored – professionally and financially. But having to recalibrate isn’t a sign of failure and it doesn’t have to derail your plans entirely; it simply means you need to reroute and find a “new” way to get what you want and where you want to be.

Truth is, you are adjusting to life changes all the time. But a layoff, like any other change you didn’t initiate, feels different. Especially if you weren’t as financially prepared for it as you would have liked. Oh, hindsight…

A layoff will inspire you to (re)prioritize your professional and financial game-plans, goals and your approach. It doesn’t have to thwart them.

If remembering that what you currently have isn’t all you’ll have is the first most important choice you need to make when faced with a layoff. The second choice is this:

As you work your way through this adjustment, your focus, energy and resources need to be centered on growth – personal growth (what can I learn?); professional growth (how might this be an opportunity to explore a career path I hadn’t considered before or have been dreaming about?); financial growth (what new choices can I make to minimize my financial vulnerability moving forward?).

As whacky as it may sound and unsettling as it may feel, a layoff can really help you create a fool-proof financial plan.

And so can I.

If you want to learn more about how I can help you right now or in the future, schedule a free discovery call. Click here.

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