Getting laid off can send you into panic mode fast, but the worst thing you can do is react emotionally.
“This is what I’d call a financial triage,” Don Grant, a CFP at Sabre Wealth, tells CNBC Select. The goal, he suggests, isn’t to scramble but rather to get organized, and if you have some advance notice, you actually have an opportunity to prepare.
Here are money moves to make amid a layoff, along with financial products that could help.
Money moves to make amid a layoffFile for unemployment
It may be obvious, but your first move after a layoff is filing for unemployment benefits. This is considered “safe” income as it doesn’t require you to pay the money back and there’s no interest. Rely on unemployment before turning to your savings or any credit card.
Use a budgeting app to figure out your survival number
Next step: Grant suggests calculating exactly what it costs to survive each month. Pull your bank and credit card statements and add up only the necessities.
“Necessities are simple…food, shelter, health care and transportation,” Grant says. “That’s your baseline. Everything else is negotiable.”
A budgeting app can help you find this concrete number, and there are some free ones you can consider (since right now every dollar counts). Rocket Money, for instance, has a free plan that includes basic budgeting features like setting up budgets for different categories, account syncing and balance alerts, bill tracking, net income tracking, plus users have all their transactions automatically organized into general categories. With the free version, you can also get subscriptions identified for you — aka low-hanging fruit when you need to free up some cash.
Rocket MoneyCost
The basic plan is free. Rocket Money Premium is $7 to $14 a month with a 7-day free trial. Bill negotiation services cost 35% to 60% of the first-year savings, if the negotiation is successful.
Standout features
Easily cancel unwanted subscriptions, track your spending and credit score, automate savings and get help lowering bills. Rocket Money Premium includes additional services like net-worth tracking, credit reports and a subscription cancellation concierge service
Security
Rocket Money accesses transaction data via an encrypted token, uses Plaid API so user credentials are never stored, provides bank-level 256-bit encryption and hosts servers on Amazon Web Services
Availability
Offered online and on both the App Store (for iOS) and on Google Play (for Android)
ProsAllows you to easily view and cancel unwanted subscriptionsOffers a free versionA+ from Better Business BureauConsNonrefundable bill negotiation fee can be up to 60% of savings Premium pricing variesUse a high-yield savings account to park your cash
If you aren’t already keeping your savings in a high-yield account, now’s the time to switch over. You’ll keep earning interest even while withdrawing. These accounts earn above-average rates and have the same accessibility as traditional savings accounts from big banks.
The best high-yield savings accounts are currently offering APYs between 3% to 4% and many have no minimum deposit or balance requirements, plus zero monthly fees.
Compare the top HYSAs
CNBC Select tip
If you’ve been contributing to a Roth IRA, you can withdraw your contributions (not your earnings) anytime without taxes or penalties. This is basically a hidden emergency fund.
Keep in mind your benefits window
Once the focus on cash flow is squared away, Grant says benefits deserve close attention and quickly, because some of these decisions are time sensitive. Severance is the obvious starting point if your employer offers it after a layoff, since it can help bridge several months of expenses on its own.
Health insurance tends to be the biggest financial shock after a layoff. You’ll want to understand what COBRA will cost, compare it against marketplace plans and check whether coverage through a spouse or partner is an option. The cost difference between these can be significant, so it’s worth running the numbers before defaulting to COBRA.
Life and disability insurance are also worth reviewing. Those usually don’t follow you when employment ends, and a gap in coverage during an already unstable period is a risk you don’t want to take.
If you need to find a new life insurance policy, Amica lets you get quotes and apply entirely online. And if you meet the health requirements, you can skip the medical exam altogether. Guardian is another solid option, especially if your income or household situation might change, since it lets you convert a term policy into whole life within the first five years at no extra cost.
Amica Life Insurance PoliciesPolicy highlights
Amica offers a level term life insurance and whole life insurance policies payable for 20 years or until age 65 or 100, both with a free terminal illness rider.
Availability
Amica issues life insurance in all U.S. states except for Hawaii
Online quote for term policyProsCan get term life quote and apply online10% bundling discount with auto insuranceTerminal illness rider includedConsNot all policies and features available in all statesNo universal or variable life insuranceFew riders availableGuardian Life InsurancePolicies
Term, whole and universal
Policy highlights
Term life can be converted into whole or universal life policies. While dividends are not guaranteed, Guardian has paid dividends to eligible policyholders annually since 1868.
Age limits
75 for 10-year term policies, 55 for 30-year term policies, no upper age limit for whole life
Coverage limitsAvailability
Guardian Life is available in all 50 U.S. states and Washington, D.C.
Online quote for term policyProsHas paid dividends since 1868Whole life insurance policies up to age 90No-medical-exam policies up to $3 millionAvailable in all 50 states ConsCan’t get rate quotes or apply onlineCustomer service not available 24/7Doesn’t offer auto or home insurance
For disability insurance specifically, Breeze makes it easy to compare rates from multiple top insurers by filling out a single online form and getting quotes within 24 hours.
Breeze Disability InsurancePolicy highlights
Online policy broker Breeze allows you to compare rates for short- and long-term disability from Guardian, Mutual of Omaha, Assurity, Ameritas, Principal, MassMutual and other top providers.
AgeBenefits periodMaximum monthly benefitsElimination periodProsAllows you to compare policies from top companiesCan get approval completely onlineConsNot available in New York state
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At CNBC Select, we work with experts who have specialized knowledge and authority, grounded in relevant training and/or experience. For this story, we interviewed Don Grant, a certified financial planner at Sabre Wealth.
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal finance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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