How to Prepare for Job Loss

In an era of economic uncertainty, layoffs can happen unexpectedly.  Whether due to company downsizing, industry shifts, or broader economic changes, job loss is a real possibility for many workers. But while you can’t always control the circumstances, you can control how prepared you are. Taking proactive steps now can help reduce stress and give you more options if a layoff ever becomes a reality.

Here are some things you can do to prepare for a potential job loss and safeguard your personal finances and future.

Build Up Your Emergency Fund

The most important step you can take is to ensure you have a financial cushion in place. Ideally, your emergency fund should cover three to six months’ worth of essential expenses, including housing, utilities, groceries, insurance, and minimum debt payments.

If saving that much feels overwhelming, start with a more achievable goal like $1,000 or one month’s expenses, and build from there. Automate transfers into a special emergency savings account so it becomes a habit. Town & Country offers several savings options to make this easy. Having a safety net will give you time and breathing room if your paycheck suddenly stops.

Review Your Monthly Budget

Take an honest look at your current spending. Ask yourself:

• Which expenses are essential?
• Which could be reduced or eliminated if necessary?

Prioritize housing, food, insurance, and transportation. Identify discretionary spending you could pause, like streaming subscriptions, dining out, or nonessential shopping.

Creating a “lean budget” — a version of your budget designed for leaner times — helps you know exactly how to pivot quickly in case of job loss. It also allows you to start cutting back now and redirect those savings to your emergency fund. Town & Country has a great budget worksheet that can help you get a handle on your income and expenses.

Reduce Ongoing Expenses

Beyond identifying nonessentials, actively look for opportunities to lower your monthly bills. Can you renegotiate your internet or phone plan? Bundle insurance policies for savings? Switch to a more affordable grocery store or buy in bulk?

Even small changes — like canceling unused subscriptions, meal planning to cut food waste, or using energy-efficient strategies at home — can free up funds. Every dollar saved now strengthens your financial position and stretches your budget further if your income takes a hit.

Avoid New Debt

Try to pay down high-interest credit card debt or personal loans while you still have income. Consider transferring balances to lower-interest options or consolidating if it helps reduce your payments. Learn more about different debt repayment strategies here.

Also, avoid taking on new debt such as financing a car or large purchase. If you’re worried about job stability, this isn’t the time to stretch your budget with long-term financial commitments. The less debt you carry, the more flexible you’ll be during a period of unemployment.

Understand Your Employee Benefits

Make sure you’re familiar with your current employer’s benefits and how they might change if you’re laid off. Key things to review:

• Severance pay (if any)
• Unused PTO or vacation pay
• Health insurance continuation (via COBRA or alternatives)
• 401(k) or retirement plan options

Knowing what you’re entitled to — and how long your benefits might last — can help you plan more effectively. You don’t want to be figuring this out while also coping with the shock of job loss.

Pick Up a Side Gig

If your job feels unstable, now is a good time to explore side hustles or freelance work. This could be consulting in your field, driving for a rideshare company, tutoring, selling items online, or doing gig-based work.

Even small amounts of side income can make a big difference. Plus, having an established secondary income stream may help bridge the gap if you lose your primary job — or even evolve into a full-time opportunity.

Final Thought: Hope for the Best, Prepare for the Worst

Losing a job can feel like the rug has been pulled out from under you. But having a plan in place — including savings, reducing spending, paying off debt, and a clear understanding of your financial picture — can turn a major financial setback into a manageable transition.

By preparing today, you’re giving yourself the greatest gift of all: options. And that peace of mind is invaluable, no matter what the future holds.

Town & Country is here to help with any of your personal finance questions. Reach out to a credit union representative by emailing us at info@tcfcu.com, calling 800-649-3495 or book a consultation here.