How to Prepare for an Impending Job Loss

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impending job loss

Work at my husband’s business has been slow lately – really slow, and although there’s no indication that an impending job loss is in our future, slow business always reminds us that nothing is impossible.

In fact, we don’t have to think back very far to remember the time we walked through a job layoff. It was February, 2010, and while we hope we never have to go through it again, we want to be prepared for anything, just in case it happens again. If your company is sending signals that layoffs might be in the future, here are some steps you can take to prepare yourself to weather any impending job loss.

Impending Job Loss Rules for Survival


Before I get to the tips, let me quickly share my story. In 2010, my husband Rick’s company was slowly whittling down to nothing, and everyone knew it. There had been a couple of layoffs, and his department in research and development routinely had nothing to do (which by the way is bad sign #1). Being un-financially savvy at the time, we had a “que sera, sera” attitude about Rick’s job, even up to the day in February when he called me to deliver the bad news.

“I got my pink slip today, honey.” The words rang in my ears. I expected it, but then again, I hadn’t expected it. Denial, I guess.

Rick’s job ended six weeks later (yeah, we were lucky: usually an impending job loss means you’re gone now), and we winged it through pretty well during his seven months of unemployment. Between severance, unemployment and the like, we managed to make ends meet. It wasn’t until after he took his new job at 75% of his previous salary that our financial woes began and we fell into major credit card debt. But those of you following our story know that we woke up and smelled the coffee regarding our formerly irresponsible ways, and that we are now on our way out of credit card debt.

Rule #1 – Cash is King


Yep, that’s right. Build up that savings account big time, socking away as much as you can until you’re certain that your job is standing on solid ground. Make only minimum payments if need be on your debts, but if you can do both, build up your savings and pay off your debts.  The goal should be to have at least 6 months’ worth of expenses in your savings account, in order to sail through any periods of unemployment.

Rule #2 – Make a Bare-Bones Budget


Re-do your budget under the assumption that you’ve got very little to spend. The goal with a bare bones budget is that it contain necessities only, cutting out any non-necessities, to see what your minimum income needs to be during a time of financial crisis such as a job layoff.  In your bare bones budget, things like cable TV, entertainment and clothing funds are on the chopping block, leaving only necessities such as food, housing and energy bills to pay.

Rule #3 – Update Your Resume


It’s always good to have an updated resume, but if you don’t, now’s the time to get that resume into tip-top shape. If you feel your resume writing skills aren’t strong, look online for resume writing articles or check sites such as Elance or Fiverr to find someone who will write your resume for you for a reasonable amount of cash.

Rule #4 – Cultivate a Plan


If you’ve got an impending job loss in your future, or even the hint of a possible layoff on the horizon, now’s the time to start checking around and keeping your eyes open for potential new employment. I’d keep this search under wraps if I were you, as you don’t necessarily want your current employer to get wind of it, but just keep your eyes open for what’s cooking in your industry.

Now is also the time to form a side hustle plan. Having a list of side hustles you can do during a period of unemployment can mean the difference between financial success or failure. Job layoffs can be a part of almost anyone’s future, but by following the tips above, you can make sure you’re prepared for any impending job loss, whether or not it comes.


Have you ever had to deal with a job loss? What are your tips for surviving a period of unemployment? What advice do you have for saving for the future and paying down debt at the same time?



Photo courtesy of: Lending Memo

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Laurie is a wife, mother to 4, and homesteader who blogs about personal finance, self-sufficiency and life in general over at The Frugal Farmer. Part witty, part introspective and part silly, her goal in blogging is to help others find their way to financial freedom, and to a simpler, more peaceful life.


  • Prudence Debtfree says:

    Laurie, I’m very sorry to learn that Rick’s work situation is causing you stress. I can relate to your back story, and I also know what it is to be in denial. “Job layoffs can be a part of almost anyoneโ€™s future” – so true. It’s wise to start off with this understanding. To save that emergency fund. To live well below your means so that you can be prepared to do so if/when your “means” become less abundant. To reject the YOLO mentality of spending now. I hope that Rick’s job ends up being secure. I’ll be following your story with interest, hoping and praying for the best.

    • Laurie says:

      No stress here, Prudence. ๐Ÿ™‚ Rick’s job is secure now, but we are confident that, either way, God will indeed provide. And we’ll do our part in the mean time by following the rules above. ๐Ÿ™‚

  • Mrs. Frugalwoods says:

    I’m so sorry to hear that Rick might be laid off! You’re very smart to be prepared though. I think you’re right that if someone does have warning signs or indications of a layoff, saving should be their top priority. And, it really is possible to live on a bare bones budget–once you get started, it becomes your new norm!

  • Clarisse @ Make Money Your Way says:

    My hubs were planning to resign from his company because one company offered him a good position and a better salary. He was supposed to resign from his current company but unfortunately he can’t because of financial matters. When he will resign, he needs to work 2 months of his current company with a pending 2 months salary because that is one of his company’s rules.

  • Tennille says:

    My husband is laid off one week every summer when his factory closes down. We have learned to work that int the July budget, and have no problems since we know it is comming.

    Four years ago right before our oldest son was born he was laid off for 4 months. That was stressful and as we hadn’t yet learned to be “money wise” we were hurting. One big lesson we learned from that was to always have a stockpile of food on hand. That way we knew we would at least have that expence covered.

    • Laurie says:

      Tennille, sounds like you guys have really learned some wisdom in this area – good going on your part. Thanks for sharing your thoughts!

  • Joe Saul-Sehy says:

    It’s not lost on me how the ingredients to success are hard work and thinking about the little things, like a bare bones budget. I think people get into trouble when they want to skip the basics of financial planning and focus just on the “sexy” parts.

    • Laurie says:

      SO true, Joe!!! After the layoff in 2010, we kind of had the “we deserve” attitude that we had already cut our budget a lot, so that it was okay to continue to live within our budget at the time and put the rest on the credit card. It’s amazing how we can convince ourselves that something is acceptable that really isn’t!

  • Tonya@Budget and the Beach says:

    Great tips Laurie. I was laid off in 2008 and I had saved a bunch of money because I knew it was coming for 6 months. Although I was super smart there, I failed miserably after because I blew through my savings by NOT doing all of the things you just mentioned. I wish I could go back and re-do things totally different. ๐Ÿ™

    • Laurie says:

      That’s exactly what happened to us!!! Funny how we can be so smart in some areas of pf, and so NOT smart in others. ๐Ÿ™‚

  • Amy says:

    Laurie, we had a very similar thing happen to us, also in 2010. My husband was laid off from his job, just two months after our daughter was born. It was terrifying! We had just bought our house about six months prior, and had made the mistake of “stretching” a bit with our mortgage. (It was doable, but not very comfortable.) Our current debt situation really started at this point. He was able to find another job about ten days later, but took a significant pay cut. In retrospect, I realize that we didn’t actively adjust our expenses to reflect that new financial reality. (And now we’re paying the price…)

  • Kayla @ Femme Frugality says:

    Now that I’ve been reading PF blogs for just over a year and working to get out of debt since January 1st, I feel like I can see even more now how important it is to get out of debt. It’s important for lots of reasons, one of which is if you were to lose your main source of income. If you have debt when that happens it will be much harder than if you are debt free. Thanks for sharing Laurie!

  • Tre says:

    Great advice in how to deal with a layoff! Bare bones budget is so important.

  • Practical Cents says:

    Great tips Laurie. Especially the one about “cash is king”. You never know how long it will take to get another job and having that buffer in savings really makes a difference.

  • Autumn @ The Barefoot Budgeter says:

    This is what I’m doing now. Fortunately (and unfortunately at the same time), I had a lot of warning and have had plenty of time to prepare. I’m probably going overboard with stockpiling cash, but I really, really don’t want any stress when my last day finally comes. And I want to make sure I take plenty of time to find a new job that’s a good fit instead of being forced to take the first one offered.

    • Laurie says:

      Autumn, I think you’re being really smart. Better to have too much cash than not enough, otherwise you’ll be tempted to take that first job offered. Great work, my friend!

  • Kassandra says:

    I’ve never experienced a lay-off but DH’s line of work is usually quieter during the months of Jan – April so saving a high portion of our income is our answer to this. This year he had almost no downtime with work but I will never take that for granted. You know how I feel about side hustles ๐Ÿ™‚

  • dojo says:

    I wished I knew this 5 years ago. In my case the ‘preparation’ meant; get an expensive car loan, don’t work on your side business and save nothing. Let’s say it was painful ๐Ÿ˜€

  • Victoria @thefrugaltrial says:

    My job is ending in February. I am now at the point where I will only pay the minimum repayments on my debt and save the rest. I am somewhat lucky as my partner has good savings so I won’t starve or be homeless but I wish I had more savings.

    • Laurie says:

      Victoria, you’ve got a great plan in place. Keep up the good work, and the great attitude. That new job will come.

  • Myles Money says:

    Job security seems to be a thing of the past: it seems no-one is safe these days. All the more reason to save for a rainy day (it’s too late when it’s already raining) and to have side-hustles to keep the wolf from the door if something goes wrong at the office. I’m glad your rough patch is behind you now, Laurie.

    • Laurie says:

      I agree, Myles. Our parents/grandparents had job security, we do not, and we need to understand that, accept that and prepare accordingly for that. And thank you, I’m glad it’s behind us too. ๐Ÿ™‚

  • MoneyMiniBlog says:

    Great post, Laurie! I think the most powerful thing you can do is to combine number one and number two.

    I’ve always said that people’s savings/emergency funds should be set at the amount that they can live bare-bones on. If you live on $3,000/month with a job, then as long as your debt-free or close to it, you should be able to live on $1,500 if you tighten up.

    A fully funded emergency fund can last longer than you think!

  • Gary @ Super Saving Tips says:

    Excellent points on an important subject. Sometimes the job loss is a different kind…my wife had to stop working due to illness. Having income protection insurance (or disability insurance), plus an emergency fund and a bare-bones budget, can make all the difference until government benefits are approved (which can sometimes take years).

    • Laurie says:

      Yes, thanks for mentioning that, Gary -people often forget that aspect/reason for job loss. There are so many reasons for people to be prepared.

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