The First 48 Hours After a Layoff Could Make or Break Your Finances—Here’s What to Do

Suddenly being laid off from a job is a shock to your life and to your finances. But there are key things you can do to protect yourself.

“Being laid off is never easy. The loss of income, daily structure, and sense of stability can be deeply unsettling. And yet, there are several immediate steps people can take to regain control and protect their financial future during this difficult transition,” said Trevor Ausen, a certified financial planner and founder of Authentic Life Financial Planning.

Here are seven things to do to protect your finances after a layoff.

Review a Severance Package

If you are lucky enough to receive a severance package from your old employer, you’ll want to assess it carefully. Make note of how much your compensation will be and when you will receive it. Make a plan for the best uses of the money. How many months of living expenses will your severance check cover?

Apply for Unemployment Benefits

You should apply for unemployment benefits as soon as possible—in some states, it can take weeks to receive benefits.

The money you receive can help you get by as you search for a new job. Unemployment insurance programs are run by the states. So check your state’s website for the specifics. You may need to apply online for your unemployment benefits, and some states offer toll-free numbers for help in filing.

“Even if you received severance, apply for unemployment as soon as you’re eligible. It’s a helpful bridge while job hunting. The process can take time, so don’t wait until you’ve burned through savings to start,” Ausen said.

Reassess Your Spending

Without a steady paycheck, you’ll need to lower your spending. Where can you cut back? “Take time to audit your monthly expenses and identify areas to cut back temporarily. Tools like Monarch Money or You Need a Budget (YNAB) can help you track your spending in real time,” Ausen said.

Consider Health Insurance Options

To get new health insurance coverage, consider joining your spouse’s health plan or checking out a plan from HealthCare.gov. You may be able to continue your employer’s healthcare plan for 18 months through the Consolidated Omnibus Budget Reconciliation Act (COBRA), but it could be expensive.

“Your former employer is required to offer COBRA, which allows you to continue your health coverage, though often at a much higher cost,” Ausen said.

Be Smart About Your 401(k)

Don’t make any sudden moves with your 401(k). “Don’t panic and cash out—it triggers taxes and penalties,” says Filip Telibasa, a CFP and owner of Benzina Wealth. “You can leave it with your old employer, if allowed, roll it to an IRA for more control, or to your next employer’s plan. The key? Keep the money growing.”

Review Your Stock Options

While reviewing your stock options, take note of timelines. “Most companies require you to exercise vested options within 90 days of termination, or you lose them,” Telibasa says. “Check the plan documents and talk to a financial pro before making a move.”

Protect Your Credit Score

Take note of the payments due on all your credit cards and loans. “Late payments kill credit scores. Automate minimum payments on loans and cards. If necessary, call creditors and ask for temporary hardship programs,” Telibasa says.

The Bottom Line

Getting laid off is a stressful time, but there are things you can do to keep your finances in order.

With such a big change in monthly cash flow, you’ll also want to adjust your budget, curbing unnecessary spending and focusing only on essentials.

Most importantly, apply for unemployment benefits ASAP. If possible, use that money to cover essential expenses like rent and food. And if you receive severance, make sure to include that in your budget.

Don’t forget about your credit score either. Make the minimum payments on credit cards and loans, so your credit score doesn’t decline. If those payments are too much for you to handle, reach out to lenders about hardship programs.