Zach Abrams Discusses, in U.S. News and World Report, How to Be Prepared for a Layoff.
Prepare Your Finances for a Layoff Suspect that you might lose your job?
Monday, November 28, 2016
Here's how to prep your finances for life without a paycheck.
By Susannah Snider | Staff Writer Oct. 12, 2016, at 9:43 a.m.
Trouble is a-brewing at your company, and there are signs that your job might be slashed. Maybe there have been layoffs already. Maybe you sense your boss isn't pleased with your performance. Whatever it is, you've got to start hunkering down and prepare for several months – or more – without a paycheck. "You want to triage this thing and not put yourself in too bad of a position," says Ed Vargo, certified financial planner, founder and private wealth manager at Burning River Advisory Group in Cleveland.
Here's how to prepare your finances for a potential layoff. Slash spending. Don't wait until you're handed a pink slip to start cutting back on spending. "If you see the writing on the wall, then that’s when you should immediately act like it’s happened," says Melissa Sotudeh, a wealth advisor at Halpern Financial in Rockville, Maryland.
Examine your budget for categories where you can cut back. You might choose to tamp down on restaurant meals and future vacations. You may be able to extend your auto loan to lower your monthly payments. You might renegotiate your cable – or better yet – cut it entirely.
Once you've cut your spending, funnel the extra cash into a savings account. The key is to keep it liquid, so that you can live off of it when your paycheck ceases, experts say. "If you can reduce those guaranteed fixed expenses, it can make your life so much more manageable," Vargo says.
Reduce savings. It may make sense to scale back on contributions to certain long-term savings accounts in order to carve out room in your tightening budget. "If you don't have an emergency fund, it's a good idea to halt contributions to your 401(k)," says Zach Abrams, a certified financial planner and manager of wealth management at Capital Advisors Ltd., in Shaker Heights, Ohio.
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Zachary Abrams
Manager, Wealth Management & Portfolio Analysis
CFP®
Nathan Creviston
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CFP®, ChFC®, RICP®
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