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5 Ways Financial Advisors Can Help Clients Rebuild After Job Loss
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Getting fired is traumatic on multiple levels. In such stressful situations, it can be difficult to confidently navigate the way forward and know where it is best to focus your efforts. That’s what I tell my clients.
Main points
- Give yourself a minute to be upset. Being fired can trigger a variety of reactions and emotions, such as anger, sadness, or fear.
- Take inventory of what you own. Having a clear understanding of the resources available ensures that you can cover your basic expenses for a period of time.
- Carefully review your severance package and all available benefits.
What I tell my clients
1. Inventory list
Start by counting all the liquid (available) cash in your checking/savings, money market funds or CDand the incoming severance pay or bonus payout. Add up your basic monthly expenses like rent/mortgage, utilities, and groceries. Then you can consider more discretionary spending Categories such as travel or entertainment. The goal in the beginning isn’t necessarily to cut back on spending, but to understand how much you typically spend.
2. Assess your runway
Once you know your monthly cash burn rate and how much cash you have, you can evaluate your “runway” — in other words, how many months of current expenses you have before you can’t cover your daily expenses .
notes
At least 95,667 employees at U.S. technology companies will lose their jobs in 2024, down from 191,000 layoffs in 2023, according to Crunchbase data.
3. Apply for unemployment
The file is unemployment Immediately so you can get the most benefit.
If you receive a severance package, review the details carefully to make sure you understand your options regarding equity compensation, benefit transfers, and vacation pay.
important
If you are in a role subject to a non-compete or non-competition clause, it may be wise to consult an attorney.
4. Start looking for a job as early as possible
It’s okay to give yourself a week or two before starting, but don’t wait too long. You don’t want to wait until you need income and was forced to accept the first job.
5. Know your benefits
Some of your employer-sponsored benefits may be transferable (meaning you can keep them after you no longer work there). In particular, you may be able to receive medical/dental/vision benefits through: cobra There may also be disability and life insurance. While paying these premiums out of pocket can be daunting, it’s important not to let critical coverage lapse. You generally have 60 days to decide whether to keep your health insurance, and the benefits are retroactive to your termination date.
bottom line
Receiving the proverbial “pink letter” may feel like the worst-case scenario. Thankfully, there are many practical steps you can take to ensure your financial life stays healthy. Taking on one thing at a time and making sure you take care of the most critical parts first will give you some breathing room as you consider your next steps.
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