Managing Your Money: Layoff Survival Budget Goals and Managing Expenses

By Brenda L. Peterson, The Layoff Lady

Post-Layoff Changes

When your “day job ends,” many things in your financial life change. For one, what is for many people their primary source of income, ends. This often prompts a quick shift to a short-term "survival" mindset that will last from the layoff event until the first paycheck from that new job arrives. 

Let's talk about your new financial goals and how to manage expenses.   

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Disclaimer: (You know there has to be one of these now that we're talking about topics like personal finances and health insurance.)

While I know quite a bit based on my previous work experience supporting financial coaches, my own research, and my personal life experiences, I do not currently hold a license or certification to give financial advice. Therefore, the information provided here is educational information provided as guidance.

I hope you can glean value from my lessons learned. Feel free to take my recommendations or not—but whatever you do, double-check my facts (and everyone's facts, for that matter). This is your life, and you will care more about your finances and health care than anyone else. With that, read on. 

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Employed Financial Goals

When gainfully employed, your household financial goals may look like this: 
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• Pay monthly bills on time and in full.
• Spend money on things that you need and enjoy.
• Save in a Health Savings Account (HSA).
• Save for retirement.
• Pay down debt.
• Give to causes you care about.
• Save for short and long-term goals. 

Typically, goals include living within your means and spending/saving/giving money in line with your values and financial priorities. When things are going "as normal," you probably have the capacity to think about current activities and consider what is possible in the future.

Layoff Financial Goals

During a career transition, financial priorities shift from being proactive to focusing on the here and now. The goal is to get through the next one to six months with as few adverse effects as possible. Here are my recommendations for crucial goals to keep in mind during a period of reduced income and job transition: 
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• Pay monthly bills on time and in full (or make other arrangements).
• Prioritize money on things that you need in the short term.
• Find ways to enjoy your life that have a smaller price tag.
• Minimize and delay expenses.
• Preserve your credit score.
• Tap savings as needed. Use retirement savings as a last resort.
• Minimize the amount of debt incurred.

​While navigating post-layoff unemployment, the goal is to make it through with as few bumps and bruises as possible. Instead of trying to pay off a previous purchase or save for a goal, you will probably leave any “extra” money in your checking account just in case. 

Paring Down Expenses

This is also a good time to see what expenses you can pare down in the short term to ensure that the money you do have lasts a little longer. Here are a few ideas:
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• Review monthly bills and see what you can minimize, stop for a while, find a better deal, or delay.  
• Plan meals and buy groceries more mindfully to minimize waste.
• Make fewer restaurant trips and do more cooking at home.
• Meet people more often for coffee or a drink than dinner.
• Cut back on subscriptions (tv, music, audiobooks).
• Do more outdoor activities and YouTube exercise videos, and fewer gyms and in-person classes.
• Take fewer flying vacations and more day drives to local destinations or overnight trips to stay with friends and family. 

Prioritizing Expenses

Here is a recommendation for prioritizing which bills you pay when money is tight:

• Rent or mortgage payments
• Transportation
• Phone
• Utilities: electricity, gas, heat
• Food (which is lower on the list because food help is more readily available)
• Minimum payments on debt

What To Do If You Can't Pay

If you can’t pay your bills, call the company and discuss how to make arrangements. Instead of just plain NOT paying a bill, make a phone call. I know this can be hard and humbling, but it is important to figure out a plan. Remember, you're not the first person to be in a position where they had an unexpected job loss and needed to figure out alternatives. It is also to the company's advantage to work with you. It's in the company's interest to help you stay on track as a customer than for them to spend the time and staffing on repossessing items or turning off and on utilities. Help them help you.

Making this call also helps minimize damage to your credit score (which could even impact your ability to find work sometimes). Be sure to call right away when you start to have issues instead of waiting until you have a lot of issues. I encourage you to call when you worry abouat having a hard time making one mortgage payment instead of waiting until you are months behind. Remember, though, even if you have waited, MAKE THAT CALL! 

When working with a company on making payment arrangements, you may be able to defer payments, figure out a payment plan, take advantage of a company-sponsored program, or find a government-sponsored program to help you during a hard time. County, faith-based organizations, and non-profits may be able to help you, too. Whether you need help paying for gas, food, transportation, or utilities, make sure to use the available resources.

Learn More

• myFico.com: What’s in my FICO score? 
• Business Insider: How Your Credit Score Can Impact Your Life
• ConsumerFinance.gov: What To Do If You Can’t Pay Your Bills 
• Debt.org: Paying Your Debts When You’re Unemployed 
• Investopedia: How To Pay Your Bills When You Lose Your Job 
• The Layoff Lady: I Just Got Laid Off--Now What? 
• The Layoff Lady: Managing Your Money - Layoff Survival Budget Sources of Income