FIVE STEPS: First of all, don’t panic.
That’s the most significant piece of advice if you get the pink
slip, according to the Pennsylvania Institute of Certified Public
Accountants.
Here are some strategies they suggest to keep your finances in
order if you lose your job.
Plan ahead. When a company has financial problems, most
employees can see the signs long before layoffs or bankruptcy
occur. If you think your job is in jeopardy, set up an emergency
savings fund immediately. Deposit as much as you can each week into
your savings.
A severance package and unemployment benefits are unlikely to
cover all your costs, so this nest egg will come in handy if you
need it. If you are certain you are going to be laid off, consider
changing your income tax withholding to have less tax taken out of
each of your remaining paychecks.
If you do lose your job and don’t find a new one immediately,
your income will be lower for the year, so you should owe less tax.
Keep in mind that you may end up owing tax if you lower your
withholding but your income level does not change.
Ask for severance. Companies are not legally required to give
employees a severance package, but they often will offer one to
someone with a good track record, especially if that person has
been with the business a long time. So try to negotiate a package,
and also ask about receiving pay for unused vacation days.
File for Unemployment. The sooner you file for this benefit, the
sooner you will start receiving checks. Remember, you are eligible
for unemployment insurance even if you received a severance package
or buyout.
Health insurance. People who receive health insurance through
their employer can retain employer coverage for a certain period of
time – but you will have to pay the premium yourself. Be prepared:
You will probably be shocked at the amount of the premium. The
federal government has requirements for this program, known as
COBRA, so be sure to get familiar with its ins and outs. If you are
married and your spouse works, you may be able to pay extra to
receive coverage under your spouse’s plan.
