Even though it looks as though the economy is picking up a bit, and the job market seems to be improving, it’s still a tough market out there. And you never know if your company will run into trouble. The economy is far from “fixed,” and even in the best of times you never know if a job loss is on the way.
This means that you need to be aware of the possibilities, and make efforts to be prepared for the possibility of job loss. Before you lose your job, act now to improve your situation. Here are some things to consider:
Reduce Your Debt
The first thing you need to do is try to reduce your debt as much as you can. While you have a job, do what you can get rid of debt. The fewer obligations you have, the better off you’ll be. When you have a lot of obligations hanging over you, it can become difficult to keep up with payments in good times. However, if you lose your job, and you have a lot of debt, you are in even worse trouble. Work toward reducing your debt so that you have fewer things to worry about if you lose your job.
Establish Your Spending Priorities
While you’re at it, look through your spending and decide on your priorities. You don’t have to cut back right now (although it can help if you are worried that your job is in jeopardy), but you should know what you will cut back on. With the decision already made, it’s easier to follow through when you have to.
Build Your Emergency Fund
As always, you need to build your emergency fund. What do you have set aside? Try your best to gradually build up to a fund that provides you with enough money to cover your necessary expenses for six months. This will help you cover your costs, even though you don’t have a job. Building your emergency fund is about making sure the mortgage gets paid, and your insurance premiums are up to date, if you lose your job.
Diversify Your Income
Now is a great time to diversify your income. Since jobs aren’t nearly as sure as they were 30 or 40 years ago, you need to be ready for the possibility that you will lose yours. One way to prepare is to look for ways to earn extra money on the side. When you have another source of income, losing your job isn’t as devastating. You still have money coming in, so you aren’t constantly drawing down your emergency fund. Consider starting a side hustle that can help you shore up your finances. Put earnings from your side job into your emergency fund while you have your day job, and you can be even more effective.
Know about Unemployment Benefits
Don’t forget about unemployment benefits. Know exactly what you need to do to claim them so that you are ready if the ax falls. Be ready so that you can get your benefits as quickly as possible after losing your job. Between unemployment benefits, a side hustle, and your emergency fund, you should be able to limp along until you find a new job.