Layoffs Happen, Even in a Good Economy
Within the next few weeks, it seems that Qualcomm is set to lay off about 15 percent of its workforce. This has become fairly commonplace in the American workplace, though it’s been a while since it happened locally on such a scale. Still, Haggen’s team reductions and this news item got me thinking about how people can prepare themselves when the proverbial axe is about to fall.
Review your emergency fund: Unemployment insurance probably won’t be enough to pay the bills while you’re out of a job, so you will most likely need to draw on savings to make up the difference. Prepare a lean and mean budget and cut spending to add to your emergency reserves. It’s best to have at least three-to-six months of essential expenses (housing payments, food and insurance) set aside in safe, liquid savings; more if you think your search might take a while. If you’re still employed and your emergency reserve is sufficient, start paying down expensive debts like credit cards. More savings and less debt give you more flexibility, and more time to find a good job.
Get advice on finances, taxes and possible legal issues: If you do lose your job, you should be prepared with a plan to put yourself in the best situation possible. You might start by talking with a Certified Financial Planner™ professional and a tax expert about any spending, saving or tax details you should be aware of. Depending on the situation and your room to negotiate, you may also want to consult a workplace attorney to make sure you understand all your options. Always ask about unused vacation and sick days, and see what you can do about extending health benefits before you start having to pick up the cost via COBRA.
Research health coverage beforehand: COBRA refers to the Consolidated Omnibus Budget Reconciliation Act, which gives workers and their families who lose their health benefits the right to choose to continue them under their group plan for a limited time. COBRA can be very expensive, so do your research early and see what coverage is available on Covered California, the state’s health care exchange.
Review your personal disability coverage: Disability coverage offered through your workplace may be slim, but it’s better than nothing. It’s always a good idea for individuals to have some personal disability coverage, and you should buy it while you’re employed because you need to prove income in order to qualify for coverage. During your working years, statistics suggest you are more likely to become disabled than to die, so this coverage is an important part of a comprehensive financial strategy, even if you’re between jobs.
Understand your unemployment benefits: Generally, it’s a good idea to file for unemployment benefits immediately, even if you’re getting severance. Check on these provisions as soon as you can. If you get a job before your severance or unemployment runs out, use those funds to top off your emergency fund and pay down debt so you’re in better position to weather any future storms.
Take advantage of any free job advice or assistance: If your employer is providing office space, resume-writing assistance or any other benefits to help you transition to your next job, take advantage of the opportunity. It’s particularly smart to get advice with resume writing because as times change, the type of experience that hiring managers want to see on resumes may change as well.
Network: I can’t stress this one enough! Reach out to friends and colleagues, and don’t be shy about asking for introductions. Make sure you’ve identified local or national professional groups that can help you to meet colleagues in your industry. Make sure your cell phone, e-mail and voicemail are always working, and have resumes, cover letters and an interview outfit ready for any opportunity that may arise.
This column is prepared by Rick Brooks, CFA®, CFP®. Rick is Director and Chief Investment Officer with Blankinship & Foster, LLC, a wealth advisory firm specializing in comprehensive financial planning and investment management. Brooks can be reached at (858) 755-5166, or by email at brooks@bfadvisors.com. Brooks and his family live in Mission Hills.
Category: Business, Local News
