How to Handle a Job Layoff When You Have No Savings

Some of the links in this post are from our sponsors. Read our disclosure to see how we make money.

Shopping for a Loan

It’s happened to so many people in the last six years or so: you walk into work, and instead of a happy greeting, they hand you a pink slip. Some people might find this a reason to celebrate, but if you have little to no savings and/or a good chunk of debt, a job layoff can be devastating, especially if it’s unexpected. Here are some tips on what to do if you find yourself in this situation.

Stay Calm


A financial expert once said, “There is no shortage of money; you just have to figure out how to get your hands on some of it.” That quote has been instrumental in helping Rick and I stay strong as we work on paying off our debt. There are many ways to make money come into your household: you can pick up a part-time job, find a side hustle, sell stuff, make stuff to sell, sell advice and so on.

However, if you’re wallowing in fear or self pity about a job layoff, you won’t have the clarity to think big-picture about how to solve your money problems, so it’s important to stay calm, focus on the task at hand (bringing in money), and start devising a plan. Even though it needs a lot of your focus right now, don’t let your job layoff take over your life from an emotional standpoint, and remember that you are a strong, smart individual.

Get a Clear Picture


If you don’t already have one, now’s the time to get a clear picture of your financial life. Start by writing down all of your debts/bills, how much you own on each one, the monthly payment amount, and the interest rate you’re currently paying.

Now that you’ve got a clear picture of how much you owe and to whom, start writing down your current income and assets. Did you get a severance package with your job layoff? How much will it amount to per month, or will it be in a lump sum payment? Do you qualify for unemployment insurance because of your job layoff, and if so, how much money will you get each week, and when will it start? Do you currently have any dividend/investment income? College Funds? Retirement funds? Obviously, you don’t want to tap into college or retirement funds unless it’s absolutely necessary, but knowing how much money you have in each of these areas will help you devise a survival plan.

Make a Budget


If you don’t already use one, now is the time to make a budget that takes into account your job layoff and figure out how much money you spend each month. Make a list of every expense – both necessary and non-necessary – including grocery, toiletry, clothing costs, eating out and entertainment costs, etc., so you know how much money goes out of your bank account each month.

Now divide that list into two separate lists: necessities, and non-necessities. Being honest with yourself at this point is crucial: You may want dance lessons for your kid, but you don’t need them. You may want new clothes each month but you don’t need them. You may want cable TV but you don’t need it. Making specific and truthful lists in this way will give you an idea of how much money you need to come up with each month, and how much money you’d like to come up with each month.

Devise a Plan


Now that you have a clear understanding of how much money you have, and how much money you need to have to survive each month, you can devise a plan to help you survive your job layoff until you find a new job. First, figure out how you can cut down on both non-necessity costs and your necessity costs, such as groceries. Then take your income sources, such as severance pay and unemployment insurance, and calculate how many months you’ll be able to pay all of your bills.

From there, devise a plan for how you’ll make up for any income shortfalls. Will you sell stuff you no longer need or use? Will you pick up a side hustle, such as dog-walking, house-cleaning or babysitting? Can you use skills you have, such as home repair skills or car repair skills, to start a side hustle in that arena? Figure out potential income sources, and get them up and running as soon as possible if you find you’re going to experience an income shortfall due to a job layoff. You may find once you’ve analyzed the big picture that you’ll do just fine simply by cutting out unnecessary expenses.

Work on Getting Back to Work After Your Job Layoff


Now’s the time to brush up your resume’, and start networking to get yourself back into the work force. Scour the papers, Internet, and other sources, such as LinkedIn to get your name out there. Let people know you’re available and what you’re looking for. Let family members, friends and acquaintances know that you’re looking for work and ask them if they’d keep an eye out for leads.

The important thing here is not to let your emotions run the show. I realize that this is often easier said than done in a stressful situation, but just remember that you are smart, resourceful and that with a bit of effort, you can get through this stressful time.

Have you, or anyone you know, ever been the victim of a job layoff? How did you handle it financially? What lessons did you learn?

Additional resource: If you’re in a similar situation and are held back by debt there are options to pay off that debt quicker. The best option is to consolidate outstanding debt to a lower interest rate. The lower your rate the quicker you become debt free and start saving more money. One of the best options to consolidate debt is through Lightstream who offers rates as low as 1.74 percent with AutoPay. 

Check out the rates at Lightstream today!


Photo courtesy of:

The following two tabs change content below.
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.


  • Income Surfer says:

    Nice post Laurie. I did have some savings each time, but was laid off three times in the past 6 years. One thing that really helped me was providing structure to my unemployed days by doing things I loved. I didn’t much feel like it at the time, but a few hours per day of volunteering or writing really helped me cope and get perspective.

    • Laurie @thefrugalfarmer says:

      Wow, Bryan, that is crazy!! I love your tip about working to provide some structure into each day – that was a smart move on your part. Best of luck to you in future endeavors!

  • Clarisse @ Savvy Scot says:

    I can relate with this post, I just ended my contract with my one client. Luckily Pauline is very supportive to me, she helps me to find some V. A works.

    • Laurie @thefrugalfarmer says:

      That’s great, Clarisse. I know others in the PF blogging world have lost big clients recently too. It’s a tough thing to go through, but support from others is so helpful.

  • Mrs. 1500 says:

    I was let go from a job that I hated in 2003. At the time, I was devastated, but it led to a career change and a job I enjoyed much more.

    This is a great post. I would only add that when you don’t have a job, finding a job becomes your new job. Send out resumes to ANYTHING that sounds remotely interesting or you feel you could do. Make a goal to send out XX number of resumes every day, and do it until you find a job.

    • Laurie @thefrugalfarmer says:

      Smart tip, Mrs. 1500, and I totally agree. It can be easy to to let the days slip away if you’re not consciously planning things and looking for work.

  • DC @ Young Adult Money says:

    I thankfully have not been a victim of a layoff, but I have often thought about my game plan when it does happen. If you do find yourself in this position I would say look into collecting unemployment from the government and treat job searching like a full-time job.

    • Laurie @thefrugalfarmer says:

      Great that you’ve got a game plan in place for this, DC. It’s never any fun when it happens unexpectedly and there’s no plan in place.

  • Dee @ Color Me Frugal says:

    I have never experienced a layoff thank goodness, but I think this would be a good reason to keep your resume up to date as well. You never know when it may happen, and having your resume updated will help you feel more prepared and ready to get back out there right away.

    • Laurie @thefrugalfarmer says:

      Yeah, an updated resume’ is always a good thing. Writing one when you’re clear-headed instead of dealing with fear from a layoff will almost always ensure a better read. Thanks for the great tip, Dee!

  • Jon @ Money Smart Guides says:

    I was laid off once and luckily I was prepared for it. Noting is scarier than realizing you have bills to pay (like the mortgage) and you have no income coming in. Growing up, my Mom was laid off and I learned a lot from that experience. Stay calm as you said and tighten up the spending. You can get through it, but it is a lot easier when you plan ahead and have savings set aside just in case because you never know if this will happen to you.

    • Laurie @thefrugalfarmer says:

      Jon, you are wise in that you took that lesson from your mom and made sure you were prepared when your layoff came – great job! Thanks for sharing an important tip.

  • Michael Solari says:

    Devise a plan! That’s exactly what I did when I got laid off and it didn’t take me long to find another job.

    • Laurie @thefrugalfarmer says:

      Glad to hear that worked for you, Michael! A plan would definitely help the stress level factor, that’s for sure.

  • Andrew@LivingRichCheaply says:

    Fortunately I haven’t ever been laid off, but there were budget cuts a few years back and there was a chance it might happen. I began devising back up plans just in case that happened….luckily it didn’t. Staying calm is a great first step…while it is a financial emergency, and you’ll likely want to make cuts to your spending, you also don’t want to make any rash decisions.

    • Laurie @thefrugalfarmer says:

      Smart move on your part, Andrew. It’s so crucial to have a plan in place before the layoff if possible. Glad your job was safe during that budget cut run – it’s a scary time when you don’t know whether your job is safe or not.

  • Mario Adventuresinfrugal says:

    Oh this is frightening.

    I’m so glad that you started out by saying not to panic. It doesn’t help anyone, and it leads to the sort of rash decisions that could only make the situation worse

    • Laurie @thefrugalfarmer says:

      True, Mario. This is why it was first on my list. It’s so easy to panic and make unwise decisions if you don’t take the time to calm down.

  • Kurt @ Money Counselor says:

    Many credit card issuers will agree to a ‘hardship plan,’ if asked, particularly if your financial predicament is temporary. Under the hardship plan, the APR may be lowered and the minimum payment reduced, perhaps for 6 months. Combined with the other suggestions Laurie makes, this may be enough to keep you from missing payments, preserving your credit rating.

  • Holly@ClubThrifty says:

    Great post! Like you said, the best thing you can do is be proactive. Stressing out won’t solve anything at all.

  • Money Beagle says:

    Good points all around. I think ‘Don’t panic’ is key. You will definitely have to make changes, but you need to have a clear head, meaning that you shouldn’t start planning or instituting those changes when your head is still spinning from the layoff itself.

  • E.M. says:

    Unfortunately, my dad was laid off twice in my lifetime, the more recent time being four years ago . I wish my parents had done half of these things during that time! My dad tried to apply for a jobs, but it became clear he was losing motivation the more jobs he applied to, and the less he heard back. In his case, age was against him, as employers were looking to hire younger people who they could pay less. My dad had too much experience in his industry. He also had no contacts to reach out to. Having gone through that, I think you laid out an excellent plan for anyone who finds themselves in this situation.

    • Laurie @thefrugalfarmer says:

      That is SO common these day, E.M., in regards to your father’s age/pay scale. It takes a lot of work to get through a job layoff, especially when you’re middle-aged or older.

  • Shannon @ Financially Blonde says:

    Like most people working in finance in 2008, I know a number of people who were laid off between 2008 and 2009. I know that it was scary and surprising for all of them, but what I witnessed was that they were actually given a blessing. Most of them hated their jobs anyway and the layoff now forced them to re-evaluate their lives and goals more seriously. They all ended up someplace “better” as a result, it just wasn’t always clear at the beginning. But as you point out, all of those steps and planning are critical when you experience something like that.

    • Laurie @thefrugalfarmer says:

      Yeah, if you’re willing to look further, it can definitely be turned into a good thing. That was the case with Rick. Although the initial job offer he took after his layoff was at a 20% pay cut, he is now with a much more secure company 3.5 years later, and making more money now than he was at his old company, and has many more opportunities for advancement as well. But I think part of the reason it happened that way is because he stayed calm and objective. We had a chance at that time to buy into a number of businesses, and he was offered other jobs, but when he sat back and looked objectively, he realized that he would rather be an employee than a business owner, and then decided on taking the job offer instead. Looking back now at the businesses he was offered to partner with, we’re SO glad he took the job as an employee. But it was tempting to take the business offers since they were first to come in and we had very little savings to speak of.

  • Michelle says:

    I haven’t had a layoff, but my husband has. It’s been pretty traumatic. We agreed that he would work anywhere and apply at night if he had to. There have been times when we considered applying at Target just for some extra money!

    • Laurie @thefrugalfarmer says:

      I’ve read on your blog how difficult it was for him, Michelle. Rick is the same way; he would work at McDonald’s if that’s what it took to feed his family – that’s a great quality to have!

  • Kim@Eyesonthedollar says:

    I think the worst thing people can do in that situation is pretend nothing is different. My inlaws seriously kept going to the casino after they both lost jobs. It’s not fun, but you have to go into bare bones mode right away if you don’t have lots of savings, and it’s not a bad idea even if you do have a big emergency fund.

    • Laurie @thefrugalfarmer says:

      Excellent point, Kim. Wow – that’s crazy about your in-laws!! That gives me a stomach ache just thinking about it! I agree about bare bones even if you do have an e-fund – it’s a great idea.

  • Daisy @ Prairie Eco Thrifter says:

    I have never been laid off (knock wood) but my fiance has been laid off several times, as is the nature of his work. He was barely 20 when he was first laid off, and since then has learned to budget. He didn’t have any savings that time, but after that, he learned that he needed to have an emergency fund.

    • Laurie @thefrugalfarmer says:

      Good for him for learning that lesson, Daisy. Lots of people a lot older than him still have not learned the importance of an emergency fund.

  • Stefanie @ The Broke and Beautiful Life says:

    Wallowing in self pity is in no way constructive. After an initial cry, I try to get back on the horse ASAP.

    • Laurie @thefrugalfarmer says:

      That’s the way to do it, Stefanie. I agree about that initial cry, too. I think it’s important to allow yourself to be upset, just don’t let it become a long-term think.

  • LARRY says:

    I have just read this article and am the victim of a layoff that occurred in June 2015. While it is still a challenge in finding a new job I was able to at least get a good severance and have been using it to buy and sell items on ebay and on Craigslist. If a person cannot do this i would suggest lookinginto driving for UBER or another service like this if you have a car. Everyday is a challenge but I am not one to lay down and cry into my pillow and neither should you. Stay on it and stay positive.

    • Barry says:

      I did the Uber thing too …Until I looked further and realized using your personal vehicle for a LIVERY as in carrying passengers and earning a fee is Insurance Fraud. Even Though Uber has insurance to cover your Passenger the first thing they will do if involved in an accident will be to try to collect from your PERSONAL insurance first and once they let the cat out of the bag you will be dropped and blacklisted and face fines and jail for Insurance Fraud. So I stopped a long time ago…

  • Ruth says:

    My husband was laid off from his job of 18 years recently. We were working through Dave Ramsey’s baby step 3 at the time, so we were debt free and had most of our 3-6 month emergency fund in place.

    The job loss turned out to be a big financial blessing. 27 days after being laid off, my husband found a much better paying job in a different state. 18 days after that, we moved to our new home!

    We literally received our last severance payment on December 26 and he started work at his new job on the 27th.

    Between severance, moving reimbursement, and everything else, we ultimately ended up better off.

    Job losses can be a positive if they land you a better job!

Leave a Reply

Your email address will not be published. Required fields are marked *