Preparing for Layoffs: Financial and Networking Strategies

Carlos should prepare for layoffs by increasing his emergency savings and reconnecting with his professional network.

### Preparing for Layoffs: Strategies for Financial Resilience
* 😟 Carlos is facing a challenging situation with potential layoffs at his company, which he and his partner both work for, prompting the need for **preparation**.
* 💼 The uncertainty of layoffs makes it crucial to **maintain a larger emergency reserve**, ideally covering **six months of living expenses**, to ensure financial stability during job transitions.
* 🔍 Assessing how quickly one could find new employment is essential, as this will influence the **amount of cash needed to prepare for potential unemployment**.
* 💰 It's advisable to review monthly investments and consider increasing cash reserves, allowing for **flexibility and reducing the risk of making desperate financial decisions** if layoffs occur.
* 🛠 Tightening living expenses by cutting unnecessary costs can help create a leaner budget, ensuring that one can **survive difficult financial periods** without compromising **future wealth-building efforts**.
* 🤝 Reconnecting with professional networks can provide valuable opportunities and resources, as relationships built now may lead to **future job offers or support**.
* 📄 Preparing a resume and considering job search strategies ahead of time can alleviate stress if layoffs happen, making the transition **smoother and more manageable**.
* ⏳ Ultimately, while it’s important to **brace for potential impact**, maintaining good financial habits and focusing on **wealth creation** should resume once stability is regained.

[Music] All right, next up, we've got a question from Carlos. And we got to meet him on the Money Guide tour. So, hi, good to see you. Hey, Carlos, good to hear from you again. He says, Hi, Money Guy family. My company has announced layoffs again, and this time it's going to be more detrimental. My partner and I both work for this company. How should I prepare? Oh man, I know. We're sorry to hear that too, but it sounds like there's a lot up in the air. So, what would you think? And I mean, this is not a unique situation either. So, what would you guys say to this? Yeah, Carlos, a lot of folks have been faced with over the past couple of years, large reductions in force to like big organizations. You know, obviously, the tech industry is a really clear example of where that's happened. And what's really, really difficult about layoffs or reductions is you never know like, okay, where's that stopping line going to be? Am I going to

be the person who's like just on the safe side or am I be the one that's in this tranch of layoffs or if I do survive this one what is the next one. One of the things that we always tell people uh that it makes sense to do is whenever your like your job situation your vocational circumstance is uncertain. We always want to air on the side of having a larger rather than a smaller emergency reserve and what you really want to make sure you have in place is traditionally. Now you said that you and your partner both work for the company so let's assume that you make about the same income that would substantiate that. Okay maybe 3 months of living expenses might be prudent but if it's likely that you may lose your jobs then perhaps you want to consider stretching out to six months of living expenses or even farther. So that if something were to happen and one of you got hit by the layoffs or worst case both of you got hit by the layoffs you know that you have enough money that

will carry you at least as long as it takes for you to find your next job. So, the other thing you have to figure out is, based on my skill set, based on the job that I do, how quickly could I find suitable, replaceable employment? Am I someone who, as soon as I put my resume out there, I know I'll have another job in the next four weeks, five weeks? Am I someone where it might take me four or five months to find the next job? Depending on the answer to that question, will depend on how much cash that you should begin stockpiling to prepare for this uncertain future. So, whenever you're facing these types of hard, hard life moments, there's nothing wrong with bracing yourself for impact. What I mean by that is, when I talk about triaging your situation, is if you know that there's a good chance layoffs are inevitable, maybe you need to look at your monthly investment plan and beef up cash. There's nothing wrong with having extra cash to prepare.

for the uncertainty of what could be coming your way because look, maybe this is a false scare, and you get through four months in the future, and you go, What was I so worried about? All that cash that you saved up and quit investing, you can put it right back into work, but you at least came on the other side with that extra margin to not make desperate decisions. If you just continue to invest or to keep piling up, and also a lot of companies will give you severance packages or other types of windfall cash moments in these dark times. Don't feel like, you know, I know it's financial mutants always like, Let's go maximize every dollar. Once again, it's okay to keep extra cash for uncertain periods. The second thing is you need to check for leaks, and I hate that. I mean, maybe it's not a bad thing. I'm making all these weather analogies, but it is one of those things where I know when I've faced emergencies or bad situations.

without mercy, I looked at my living expenses. Um, did I need to? I mean, I've had moments in my life. Now, this sounds a little old school now that we're all doing these streaming services, but I've had months where I went over the air antenna and cut all cable and cut all things like that. I cut landscapers. I cut down. Um, I mean, there was no. I started shopping my insurance providers. There was no stone left unturned to figure out how I could tighten up my cash flow so that there was as much. My. I was as lean as I possibly could be. And then you. You'll. It's no different than bracing for that bad weather event. Is you're going to do all this work. You're going to survive this. You're going to come out on the other side. But I want to encourage you when you do come out on the other side. Once you land, get back to it. I want you to. All those things that you undid on the saving and investing and building wealth for the future. Once

you get through the survival of this bad time. Don't just get stuck consuming those resources and not getting the good habits. We've got to get you back on the automatic wealth creation ASAP. The other two just behavioral things that I would mention. Whenever we have clients that are navigating this or think that they could be part of those reductions in force. One of the things we always encourage them to do is okay begin reconnecting with your Professional Network. Are there other folks in your industry or with your skill set or at other companies that it just might make sense to go have coffee with, to have lunch with, for no other reason than to make sure you're reconnecting those dots. 'Cuz you never know if this happens 6 months in the future, but now you have reconed relationship. You never know which coffee might have been the coffee that was the important one that set you up for the next thing. Not that you need to start like shopping for jobs or looking for jobs, but just making sure that you're

well connected to the business community around you. That's number one. Number two, when you have to assess how close this is, how tight to home this hits, I'm amazed at how many of our clients that will go through this. I'm like, Oh man, I've got to start now looking for a new job. Man, I've got to go do a resume. I have not done a resume in the last 25 years. I've been at the same job. I've been doing this. So just thinking through those parts and pieces, not that you have to be super specific on it, but what you don't want to do is on the day that it happens, if it happens, there are going to be 10 million things that go through your mind and 10 million things you're going to start stressing about. The more of those you can remove from the equation early on, the better prepared you'll be to brace for that impact.

How Should I Prepare for a Potential Layoff?

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The Money Guy Show

Carlos is facing potential layoffs at his company, which is a common situation for many people in recent years.

It's important to have a larger emergency reserve, especially when job security is uncertain.

Ideally, having six months or more of living expenses saved up can provide a financial cushion in case of job loss for him and his partner.

It's important to assess how quickly you could find a new job based on your skill set, as this will determine how much cash you should stockpile.

Bracing for impact by increasing your cash reserves can help you navigate potential layoffs and avoid making desperate decisions.

It's also okay to have extra cash during uncertain times, and companies may offer severance packages or windfall cash to help you through.

Navigating Financial Tightening and Career Networking

The speaker reflects on their past efforts to cut living expenses and tighten cash flow during tough times.

They emphasize the importance of getting back to saving and investing for the future once the difficult period is over.

Additionally, they encourage reconnecting with a professional network to build relationships that could be beneficial in the future.

Being well-connected to the business community is crucial for navigating job changes.

Many clients are caught off guard by the need to find a new job, especially after long tenures in one position.

Preparing early by updating resumes and addressing potential stressors can help ease the transition when job changes occur.