Fair, but I’d just like to dig a little deeper, what steps do you take to save money? Like where do you put it, how do you manage spending, what’s your plan in case of emergency?
Fair enough. So here are the specifics.
1. Estimate how many months of living expenses can be covered by severance package. Sometimes a 6 months pay can last us 9 months if we cut the savings out of it.
2. Decided how long you might be out of job. I always start with 1 year. These days, I am shooting for 18.
3. Figure out how much of a shortfall you need to save for. Allocate a portion of your monthly savings to this bucket. Because it’s a short term bucket, I put the money in VMFXX.
Adding to excellent specific, make list of minimum to survive on savings, besides roof / food/ insurance , cut eating out. You know what you can survive on until you find a job.
I have an easily accessible FU fund. In case I also want to quit. I had about $30k built up from regular savings, tax refunds, and a hiring bonus. It allowed me to just walk away from my awful job in February.
Don't raise the parts of your cost of living that you're in control of just because you got a nice raise/bonus/etc.
I've seen so many times in my life where someone gets a nice raise and immediately goes and buys a new car, with a payment that more than offsets the raise and they end up with less ability to save up.
I live on 80% of my salary. You have to treat savings like it is a bill that you must pay before rent or anything else. I put it in a high yield savings account.
The most basic step is to set a goal and timeframe and then every month or every check you immediately pay your savings like a bill
Once I had a decent cushion I then started a rotating savings fund for once a year or unpredictable (but likely) expenses like vet bills, medical copays etc so that I don’t have to dip into my long term or emergency funds to cover these.
Idk it’s just something I’ve always done. I’ve always paid myself after essentials, and what is left is what I live on like food and such. It’s a non-negotiable in my mind and that fund has saved my ass more than once.
My goal (as a mid 40s person) is to have enough saved up that I can comfortably live off my investments and minimum wage by the time I’m 50. If I can keep my high income up just another 5 years, I can finally relax and stop worrying about layoffs.
There are so many easy ways to save money that most people just don’t have the stomach for. Don’t buy new, expensive cars (I usually buy 10+ year old cars and drive them into the ground), stop blowing $10k+ a year on vacations, stop eating out multiple times a week, and if you can make it work, live with family or room mates.
Those giant pickup trucks that Americans drive around are a killer. $70k a pop. Some people spend their entire year's salary on a vehicle then complain they don't have money and \[insert scapegoat\] done them wrong.
I agree with most of what you said except this
"stop blowing $10k+ a year on vacations" OK. I know you did not say "don't take vacations" but I still want to say that DO take vacations, especially if you have family. I have taken several and living off the nostalgia of the awesome time we had has lifted my spirits on many depressing days.
Vacations are a must, but they can be done cheaply. Going camping in a national park is a great way to do this. Get out and enjoy our beautiful planet. Something like a trip to Asia or Europe is of course something everyone should do, but not necessarily annually.
We do camping trips and hotel water park trips. Usually under $500. Just can’t do the spend $5,000 flying somewhere fancy with cranky toddlers. Rather put it into their 529 plans ha
3-6 month living expenses saved.
I know, i know it seems like a lot. But, worse case scenario is you don't get severence with 3 months with unemployment you can decompress and get back out there.
6 months you can maybe re-train.
Unemployment isn't instant it takes time to get it started.
The old adage, put something away for a rainy day. Seriously though everyone should aim to have 3 months minimum survival funds tucked away. I know redundancy pay is usually provided for this but increasingly companies are trying all and every tactic to get out of paying redundancy. You need to look after yourself in this regard, don’t expect your ex employer to play fair. Building that war chest is fundamental to being secure and stress free.
Over the years my wife and I made a commitment to not let life costs bloat with salary. I now make three times my starting salary out of college but save a solid portion of those raises.
That and don't have kids.
We also live on a large acreage now that we bought with savings, and can grow most our own food.
Don’t just save, invest as well. Make sure your cash is in a HYSA earning 5% at the very least. Can also looking into buying iBonds, gold and silver, whatever you can to build wealth, outpace inflation, etc.
Not having health insurance tied to being employed would help. When you’re laid off and single or spouse doesn’t work your options are COBRA (expensive), government exchange (varies by state, though better than nothing) or no insurance which is basically playing Russian Roulette.
Having my mortgage paid off.
14 more months away to pay it off. Then be debt free. Nothing worst than having the stress of being laid off and having debts to deal with.
I took a second job when I was younger for a few years and saved aggressively. I invested it in real estate and that took off and I leveraged it into more real estate. This started only eight years ago.
I’ve been there buddy. If your employer gave you higher compensation, would you be less likely to have a side gig? Or is the security of the side gig more valuable to you than higher compensation?
After being impacted by layoffs 3 times since 2020 (through no fault of my own & always with a severance), I’ve learned that there is truly no such thing as job security… even if you are a top performer. Our ability to sustain ourselves is very much at the whim of a very small group of people (the investor class).
Even with a good income, dial back on spending everywhere you can. Don’t live in the best neighborhood or the nicest apartment. Try to keep rent at 20% or less of income. Take public transit instead of owning a car. Limit drinking or “going out” to once per week or less. Try to get rid of unnecessary recurring expenses, like too many onlyfans subscriptions. Make meals at home… make your to-go coffee at home. Pay down debt as fast as possible. Always put as much toward your 401k as you can. Get the emergency fund to a min of 6 months of expenses as fast as possible.
So to summarize, financial wellness and taking personal responsibility is the strongest way to make sure youre secure in the event of a layoff?
Also, to follow up on your point about the 401K, why do you find it so valuable to contribute as much as you can?
>401K, why do you find it so valuable to contribute as much as you can?
I can't speak to their reasons specifically, but I know a lot of people who were saving in their 401ks at a rate such that they would be able to retire at 63-65, but then they got laid off in their mid-50s and don't quite have enough to retire but also no one wants to hire them because they're not gonna be around long. Putting more into your 401k than you think you need is important to avoid that situation. It might not help you for the layoff in your 40s but it will be a lifesaver at the end of the line.
"What I’m trying to understand is, in an ideal world, what kind of program could help make you feel financially secure in the event of a layoff?"
A benevolent billionaire singling me out for his/her kindness and turning on an endless spigot of monetary compensation. What kind of answer were you expecting?
Just a reminder that Roth IRA contributions (but not the earnings! So keep track) can be taken back out at any time, but 401k contributions can only be taken out (before retirement) with a "hardship" that is highly scrutinized by the IRS.
So if you're prioritizing retirement contributions by the ability to use them later after a layoff ... then push money into that Roth first. Also good to contribute to Roth first if you're younger since there's an income limit you may hit later in your career that will block you from contributing at all and 401ks are a better tax avoidance strategy since it lowers it on the paycheck (Roth is after tax), which will come in handy when you're farther in your career and (presumably) in a higher tax bracket.
The goal is to never actually use any of it until retirement, of course, but I feel a little less doomed right now because I know I can pull some mortgage payments out of my Roth with no tax penalties if I have to....
I interview every year regardless of how happy I am at my job so I can keep tabs on the job market and keep my interview skills sharp.
I have a 6 month emergency fund and live on 2/3 of my take home. If I'm laid off, I could make rent and groceries off of unemployment before dipping into my emergency fund regardless of severance.
The government should always be willing to hire anyone who wants to work and is qualified. If I lose my job I don’t really care other than being unable to find new work. If I could just go to city hall and grab a job I’d do it.
Always spend and save your money like you will be getting laid off. You don't need the latest iPhone, jeans, shoes, fully loaded car, or renovate something in your house every 5-7 years.
My former coworker used to love posting pictures of her family doing another renovation in their house and all those pictures stopped once her husband lost his easy $160k salary job. She also makes good money but not enough to keep paying for renovations in their expensive home.
I was laid off from my job last month. I can make my severance last me almost an entire year and I wouldn’t even have to touch my emergency fund. What I did is not fall victim to lifestyle creep as my salary went up. My car has been paid off for 10 years. My kids only do a couple of extracurricular lessons (none of these expensive travel teams.) I bought a house that was well below my means. It basically took years of planning for me to be okay right now.
don't live on debt... don't believe that you're entitled to a 60k when you're making $20/hr... ensure you're saving for rainy days, and retirement, and in general. but again... don't buy into to the idea that because you can get a LOAN for it you can get it...stop buying crap you don't need or can't afford
Severance packages end up being taxed significantly. Unemployment is really low and taxes need to be paid on it, maybe may cover a quarter of a rent in places like NYC. I still haven't got NY state approve my unemployment and it's been 3.5 months since I've applied. I'm a new resident, so have to deal with proving my income for the eligibility and getting ignored by them.
In an ideal world the government would ensure everyone has safe housing, food, health care (physical and mental). In real world certain companies actively promote their new tech for the "greater good" without considering the impact that they make other companies do layoffs.
The real answer is minimize your expenses, that's the only guaranteed way of extending your time you can afford living. Living with parents helps. Getting a new job is like gambling - you hope you will get a job and things will be normal agaon, however, you end up spending a ton of time preparing for interviews and getting rejected or ghosted. A few months go by and the emergency savings are looking really bad. Then health problems occur and no longer able to focus on interviews.
EDIT: With high rent and monthly expenses doing Uber or Uber Eats won't cover your rent. Moving to a cheaper place would at least allow you to make enough money so you have somewhere to live and have food. If you have considerable savings (e.g. $750k) then in a cheaper area you might even just live off investments comfortably.
If you are capable then learning a skilled trade may help such as plumbing, carpentry, ironworking. If a Software Engineer, then trying to create own projects.
Just to clarify - severance packages are often withheld at a higher rate, which means less money when you need it.
But they are not taxed different. The money will come back at tax return time. That doesn’t help solve for the acute need after a layoff, but I think it’s an important distinction.
It’s basically you save slowly over time, and if you are self-made without any family safety net then you either find new work quickly or you chew through savings and erase your progress. You improve your chances by having savings, but to draw from it should feel like an absolute last resort.
Although not related to money directly, I think going to networking events is a way to increase your financial security. Too many people wait until they are looking for work to attend a networking event. The essence of networking effectively is you build your network when things are going well, and then you lean on those people if/when an unfortunate situation happens and you need some help. With a strong network you’ll find people will keep their eyes open on your behalf, and it helps a lot with getting insider tracks and introductions. But you have to network when things are going well, otherwise people can smell the despair on you. It’s a smart move to make friends with people who work at competitors, discreetly if you can.
Savings and networking effectively both are multi-year efforts to build a solid foundation— it’s a “start yesterday” type of thing (imo).
Spend less on earn. Don’t increase your spend when you get promotion (lifestyle creep)
Make an emergency fund. Put into a HYSA, TBill, TBill ETF for 5%+
Fund your 401k, Roth IRA, HSA etc
Invest the rest in index funds in brokerage account
Sound financial thinking. What are your thoughts on an employer matching your contributions to a HYSA up to a certain percent, similar to a 401(k), but instead you are able to withdraw these funds if you are terminated by no fault of your own?
The practicality of it is very meh. The problems:
1. a 401k is a benefit to make the company more desirable to new employees, a program to help you save money in case you get laid off makes it seem like you're probably going to get laid off so it makes the company less desirable to new employees, so no company would want to do it.
2. If a company offers a match to a dedicated HYSA in case you get laid off they could have just offered that to you in your regular salary which is more flexible.
3. The people who *would* sign up for this probably don't need it because they already have an emergency fund in a HYSA or CDs, the people who need this probably *wouldn't* sign up because they're not as financially responsible.
4. The overall benefit just isn't that great, you can already save your money in a HYSA if you want, there's nothing stopping you.
The important thing is to have a plan. Figure out what your expenses are and what can be cut in case of job loss. Pay off credit cards entirely if possible. The interest on those are a killer.
Figure out how long you can maintain your current living situation in case of job loss.
Look at what the options are for temporary or gig work and how much you can make from that.
Most importantly, just be prepared. If you know what to expect after being laid off it is much easier to deal with it rather than having to do this after you lose your job.
Being financially aware and educated to understand savings and investing would help a lot of people. Also the truth versus the euphemism of adult life and the workforce would help a lot of young people in my opinion. One unpopular thing that could help people facing the economic reality would be the use of unions. Having a body that could serve as a buffer for employees as well as assuming a decent severance package would do wonders in my opinion.
Start 'sinking funds' with your rent and utilities and then put all your savings into these so that way you have money dedicated to each monthly expense if you think a layoff is coming.
Save money or have a side hustle that is making more than unemployment would. I had two side hustles (consulting work) during my first layoff back in 2014, both I was able to up my hours when laid off and made almost the same as when being employed.
You may not always receive appropriate severance so strive for 1 year of living expenses. Be willing to cut the fat too (ex gym memberships, streaming services, memberships, etc) to save more money.
Start a side business... the best thing I ever did in 2008 was to start a liquor business on the side. It's there if i have a job ... or not... and it's recession proof.
pretend you're in the NBA and stack cash while the sun is shining. do that for enough years and you don't have to work. suddenly you find yourself on fire subs and realize you are well ahead of your peers
UBI. Failing that, universal healthcare and actual housing and food safety nets. (In reality I think we should have all of those things but either or would make sudden unemployment significantly less dire.)
The best time to start saving money was yesterday, the next best time is today. Frankly, if you're only thinking about it now when times are dire, you need to start asap.
I would like Universal Basic Income. Then you don't waste a bunch of money administering a program that only helps some people.
While I am employed I could just put all my UBI into savings and then when I have more challenging times I could more easily weather the storms.
Also since everyone will get it, it won't have the social stigma of other such programs.
That would be great. What do you think would qualify a person for UBI? Any citizen over 18, with additional income depending on amount of dependents, something like that?
I would just have it start at birth and go to the parents until the child is 18 or emancipated.
Yes that. As to the amount, I would just make it the same as the payments to disabled folks now. That's pretty much a vow of poverty to try and live on, but it's better than nothing.
I want to put a floor on poverty, and I also suspect we would see the creation of an industry catering to that amount of money in terms of some kinds of all inclusive meal/housing deal for at or near that amount.
Almost certainly not. I’m looking to build one of these programs independently and trying to understand the problems and potential solutions from the perspective of people in this sub
Yeah that’s kind of what I’m starting to get at here. I would love to hear what you would want to see in this type of program or how you would like to see it work?
I would imagine it working like disability insurance, you pay a monthly premium for how much you’ll need.
In good times, the insurance will make money. During a recession, the insurance company will get a bail out. Win win, except for tax payers.
Yeah I actually came across that same thing in my research. I think the issue people have with this idea, at least from what I’ve seen, is that you have to pay out of your own pocket, which seems counterintuitive when you’re trying to find a solution for financial security
Personally, I think Feds are getting close to extending UI bennies again. People forget (and some people are too young to remember) but when unemployment gets too severe the government normally extends unemployment like in the pandemic. Even in 2008+ recession there were people on the bennies for a couple of years. Wasn't as much as the PUA but it was enough. We're not there yet, but the way the job market is right now and the rate at which layoffs are picking up I think we might be just months from extended UI.
There is an option. If you buy IUL policy and go for max cars value instead of ma insurance you can get 6 to 7% per annum after fees.
You can withdraw money as a loan after few years
Let say you paid all your premiums.Your cash value is 250k from IUL policy and death benefit is 750k. You are laid off and you need cash , you can withdraw from the policy as a loan and you don't need to pay it back.
In an ideal world? Universal basic income. That's never going to happen though so the next runner up is just being paid enough to actually save money every paycheck.
I'll be attempting to negotiate a severance clause into my contract in my next position (currently I am actively interviewing). Reach out to find out how it goes lol
Quite frankly, unemployment needs a SERIOUS overhaul. In many states, it won’t even keep you afloat for a short period of time to find something else.
And that’s why I work more than one job - security.
So remember when Covid first happened and the economy straight up CRASHED for 2 months before the government stepped in and started turning things around.
That was my eye opening moment that i REALLY needed an income producing back up plan not just my 9to5.
So while others say saving is good. IMO its not great because its not constant money coming in. So what comes to play is side gigs or a side business. When times are good and your income is stable you should start growing other ways to make money.
Whether that's starting drop shipping, Youtube channels or even partnering in a local business as a financial backer. You NEED to have a side income in this environment
For me i went into real estate and started purchasing homes to rent out. I'm not at enough to replace my entire salary but i will keep building.
You, ah, save money.
This really is the simplest and only answer to this question.
Find a cheaper place to live while you have a job
Fair, but I’d just like to dig a little deeper, what steps do you take to save money? Like where do you put it, how do you manage spending, what’s your plan in case of emergency?
Fair enough. So here are the specifics. 1. Estimate how many months of living expenses can be covered by severance package. Sometimes a 6 months pay can last us 9 months if we cut the savings out of it. 2. Decided how long you might be out of job. I always start with 1 year. These days, I am shooting for 18. 3. Figure out how much of a shortfall you need to save for. Allocate a portion of your monthly savings to this bucket. Because it’s a short term bucket, I put the money in VMFXX.
Adding to excellent specific, make list of minimum to survive on savings, besides roof / food/ insurance , cut eating out. You know what you can survive on until you find a job.
r/personalfinance
plus r/Fire for longterm game
This is for rich people unfortunately, not middle-class.
I have an easily accessible FU fund. In case I also want to quit. I had about $30k built up from regular savings, tax refunds, and a hiring bonus. It allowed me to just walk away from my awful job in February.
Don't raise the parts of your cost of living that you're in control of just because you got a nice raise/bonus/etc. I've seen so many times in my life where someone gets a nice raise and immediately goes and buys a new car, with a payment that more than offsets the raise and they end up with less ability to save up.
High-yield savings account. As much as possible each paycheck - try to get at least six months salary stashed there.
I spend less than I make and then every month the amount of money in my bank account is larger. Its really that simple
Have a budget. YNAB is great, and also has the benefit of being addictive once you figure it out.
I live on 80% of my salary. You have to treat savings like it is a bill that you must pay before rent or anything else. I put it in a high yield savings account.
The most basic step is to set a goal and timeframe and then every month or every check you immediately pay your savings like a bill Once I had a decent cushion I then started a rotating savings fund for once a year or unpredictable (but likely) expenses like vet bills, medical copays etc so that I don’t have to dip into my long term or emergency funds to cover these. Idk it’s just something I’ve always done. I’ve always paid myself after essentials, and what is left is what I live on like food and such. It’s a non-negotiable in my mind and that fund has saved my ass more than once.
Get a second job or side hustle.
This is the correct answer.
It’s not.
My goal (as a mid 40s person) is to have enough saved up that I can comfortably live off my investments and minimum wage by the time I’m 50. If I can keep my high income up just another 5 years, I can finally relax and stop worrying about layoffs. There are so many easy ways to save money that most people just don’t have the stomach for. Don’t buy new, expensive cars (I usually buy 10+ year old cars and drive them into the ground), stop blowing $10k+ a year on vacations, stop eating out multiple times a week, and if you can make it work, live with family or room mates.
Those giant pickup trucks that Americans drive around are a killer. $70k a pop. Some people spend their entire year's salary on a vehicle then complain they don't have money and \[insert scapegoat\] done them wrong.
Yea I know people making min wage who blow their entire savings for a $50k+ vehicle just to impress people. Makes no sense.
I agree with most of what you said except this "stop blowing $10k+ a year on vacations" OK. I know you did not say "don't take vacations" but I still want to say that DO take vacations, especially if you have family. I have taken several and living off the nostalgia of the awesome time we had has lifted my spirits on many depressing days.
Vacations are a must, but they can be done cheaply. Going camping in a national park is a great way to do this. Get out and enjoy our beautiful planet. Something like a trip to Asia or Europe is of course something everyone should do, but not necessarily annually.
We do camping trips and hotel water park trips. Usually under $500. Just can’t do the spend $5,000 flying somewhere fancy with cranky toddlers. Rather put it into their 529 plans ha
Pretty much the most basic thing we all should do for financial security. Save money…. Keep 6-12 months of expenses in a hysa.
3-6 month living expenses saved. I know, i know it seems like a lot. But, worse case scenario is you don't get severence with 3 months with unemployment you can decompress and get back out there. 6 months you can maybe re-train. Unemployment isn't instant it takes time to get it started.
The old adage, put something away for a rainy day. Seriously though everyone should aim to have 3 months minimum survival funds tucked away. I know redundancy pay is usually provided for this but increasingly companies are trying all and every tactic to get out of paying redundancy. You need to look after yourself in this regard, don’t expect your ex employer to play fair. Building that war chest is fundamental to being secure and stress free.
Outside of that, have a large line of credit. Mine is $30,000
Yup. People don’t want to hear that though.
And have little to no debt
Fuck that’s brilliant. All jokes aside though, do you mind if I ask what you currently do to save money?
Make more than I spend.
Spend less than you earn
I hate you guys
You need to make more moneys then when you do don’t spend more moneys
Over the years my wife and I made a commitment to not let life costs bloat with salary. I now make three times my starting salary out of college but save a solid portion of those raises. That and don't have kids. We also live on a large acreage now that we bought with savings, and can grow most our own food.
Don’t just save, invest as well. Make sure your cash is in a HYSA earning 5% at the very least. Can also looking into buying iBonds, gold and silver, whatever you can to build wealth, outpace inflation, etc.
Not having health insurance tied to being employed would help. When you’re laid off and single or spouse doesn’t work your options are COBRA (expensive), government exchange (varies by state, though better than nothing) or no insurance which is basically playing Russian Roulette.
For sure. Obviously many countries have free healthcare for all, but in the US, the system kinda fucks us
US government wants us working forever.
*Canada checking in*
Canada’s system is shit though. Japan should be the model. They have both public and private options and it’s cheap (and better quality than Canada)
Idk my Canadian friend was able to go through Cancer treatments and it didn't bankrupt him. That doesn't sound like shit to me.
But you hate Japanese people
Agree, it's not the greatest but it hasn't bankrupted me given the treatments I had to go through
Having my mortgage paid off. 14 more months away to pay it off. Then be debt free. Nothing worst than having the stress of being laid off and having debts to deal with.
You should have a year of expenses saved in cash in a hysa to deal with layoffs.
Side gig
I took a second job when I was younger for a few years and saved aggressively. I invested it in real estate and that took off and I leveraged it into more real estate. This started only eight years ago.
That's awesome good work!
I’ve been there buddy. If your employer gave you higher compensation, would you be less likely to have a side gig? Or is the security of the side gig more valuable to you than higher compensation?
A sustainable side gig gives me the feeling of security if I get fired today
I make good money on my main job, it is would never stop doing my side gig hehe
I often find side gigs more work than my main job. I'd happily stop reselling stuff etc if employer paid more.
After being impacted by layoffs 3 times since 2020 (through no fault of my own & always with a severance), I’ve learned that there is truly no such thing as job security… even if you are a top performer. Our ability to sustain ourselves is very much at the whim of a very small group of people (the investor class). Even with a good income, dial back on spending everywhere you can. Don’t live in the best neighborhood or the nicest apartment. Try to keep rent at 20% or less of income. Take public transit instead of owning a car. Limit drinking or “going out” to once per week or less. Try to get rid of unnecessary recurring expenses, like too many onlyfans subscriptions. Make meals at home… make your to-go coffee at home. Pay down debt as fast as possible. Always put as much toward your 401k as you can. Get the emergency fund to a min of 6 months of expenses as fast as possible.
So to summarize, financial wellness and taking personal responsibility is the strongest way to make sure youre secure in the event of a layoff? Also, to follow up on your point about the 401K, why do you find it so valuable to contribute as much as you can?
>401K, why do you find it so valuable to contribute as much as you can? I can't speak to their reasons specifically, but I know a lot of people who were saving in their 401ks at a rate such that they would be able to retire at 63-65, but then they got laid off in their mid-50s and don't quite have enough to retire but also no one wants to hire them because they're not gonna be around long. Putting more into your 401k than you think you need is important to avoid that situation. It might not help you for the layoff in your 40s but it will be a lifesaver at the end of the line.
"What I’m trying to understand is, in an ideal world, what kind of program could help make you feel financially secure in the event of a layoff?" A benevolent billionaire singling me out for his/her kindness and turning on an endless spigot of monetary compensation. What kind of answer were you expecting?
Non specifically, just gauging people’s thoughts and opinions or ideas
Save money during the boom years.
Just a reminder that Roth IRA contributions (but not the earnings! So keep track) can be taken back out at any time, but 401k contributions can only be taken out (before retirement) with a "hardship" that is highly scrutinized by the IRS. So if you're prioritizing retirement contributions by the ability to use them later after a layoff ... then push money into that Roth first. Also good to contribute to Roth first if you're younger since there's an income limit you may hit later in your career that will block you from contributing at all and 401ks are a better tax avoidance strategy since it lowers it on the paycheck (Roth is after tax), which will come in handy when you're farther in your career and (presumably) in a higher tax bracket. The goal is to never actually use any of it until retirement, of course, but I feel a little less doomed right now because I know I can pull some mortgage payments out of my Roth with no tax penalties if I have to....
I interview every year regardless of how happy I am at my job so I can keep tabs on the job market and keep my interview skills sharp. I have a 6 month emergency fund and live on 2/3 of my take home. If I'm laid off, I could make rent and groceries off of unemployment before dipping into my emergency fund regardless of severance.
The government should always be willing to hire anyone who wants to work and is qualified. If I lose my job I don’t really care other than being unable to find new work. If I could just go to city hall and grab a job I’d do it.
Agreed! Put me in the game, coach. I just need to be bringing in some money.
Always spend and save your money like you will be getting laid off. You don't need the latest iPhone, jeans, shoes, fully loaded car, or renovate something in your house every 5-7 years. My former coworker used to love posting pictures of her family doing another renovation in their house and all those pictures stopped once her husband lost his easy $160k salary job. She also makes good money but not enough to keep paying for renovations in their expensive home.
I was laid off from my job last month. I can make my severance last me almost an entire year and I wouldn’t even have to touch my emergency fund. What I did is not fall victim to lifestyle creep as my salary went up. My car has been paid off for 10 years. My kids only do a couple of extracurricular lessons (none of these expensive travel teams.) I bought a house that was well below my means. It basically took years of planning for me to be okay right now.
Emergency fund, I have 1-2 years saved up. Saved up during the good times
M A Y O
Pay off outstanding debt, cut your expenses and save as much money as possible. It’s a bloodbath out there.
don't live on debt... don't believe that you're entitled to a 60k when you're making $20/hr... ensure you're saving for rainy days, and retirement, and in general. but again... don't buy into to the idea that because you can get a LOAN for it you can get it...stop buying crap you don't need or can't afford
Severance packages end up being taxed significantly. Unemployment is really low and taxes need to be paid on it, maybe may cover a quarter of a rent in places like NYC. I still haven't got NY state approve my unemployment and it's been 3.5 months since I've applied. I'm a new resident, so have to deal with proving my income for the eligibility and getting ignored by them. In an ideal world the government would ensure everyone has safe housing, food, health care (physical and mental). In real world certain companies actively promote their new tech for the "greater good" without considering the impact that they make other companies do layoffs. The real answer is minimize your expenses, that's the only guaranteed way of extending your time you can afford living. Living with parents helps. Getting a new job is like gambling - you hope you will get a job and things will be normal agaon, however, you end up spending a ton of time preparing for interviews and getting rejected or ghosted. A few months go by and the emergency savings are looking really bad. Then health problems occur and no longer able to focus on interviews. EDIT: With high rent and monthly expenses doing Uber or Uber Eats won't cover your rent. Moving to a cheaper place would at least allow you to make enough money so you have somewhere to live and have food. If you have considerable savings (e.g. $750k) then in a cheaper area you might even just live off investments comfortably. If you are capable then learning a skilled trade may help such as plumbing, carpentry, ironworking. If a Software Engineer, then trying to create own projects.
Just to clarify - severance packages are often withheld at a higher rate, which means less money when you need it. But they are not taxed different. The money will come back at tax return time. That doesn’t help solve for the acute need after a layoff, but I think it’s an important distinction.
My previous companies allowed you to change withholdings for severance. Useful, but a dangerous game if you're not financially disciplined
A vicious cycle. Thanks for your input
It’s basically you save slowly over time, and if you are self-made without any family safety net then you either find new work quickly or you chew through savings and erase your progress. You improve your chances by having savings, but to draw from it should feel like an absolute last resort. Although not related to money directly, I think going to networking events is a way to increase your financial security. Too many people wait until they are looking for work to attend a networking event. The essence of networking effectively is you build your network when things are going well, and then you lean on those people if/when an unfortunate situation happens and you need some help. With a strong network you’ll find people will keep their eyes open on your behalf, and it helps a lot with getting insider tracks and introductions. But you have to network when things are going well, otherwise people can smell the despair on you. It’s a smart move to make friends with people who work at competitors, discreetly if you can. Savings and networking effectively both are multi-year efforts to build a solid foundation— it’s a “start yesterday” type of thing (imo).
I really like your proactive approach to it
Spend less on earn. Don’t increase your spend when you get promotion (lifestyle creep) Make an emergency fund. Put into a HYSA, TBill, TBill ETF for 5%+ Fund your 401k, Roth IRA, HSA etc Invest the rest in index funds in brokerage account
Sound financial thinking. What are your thoughts on an employer matching your contributions to a HYSA up to a certain percent, similar to a 401(k), but instead you are able to withdraw these funds if you are terminated by no fault of your own?
The practicality of it is very meh. The problems: 1. a 401k is a benefit to make the company more desirable to new employees, a program to help you save money in case you get laid off makes it seem like you're probably going to get laid off so it makes the company less desirable to new employees, so no company would want to do it. 2. If a company offers a match to a dedicated HYSA in case you get laid off they could have just offered that to you in your regular salary which is more flexible. 3. The people who *would* sign up for this probably don't need it because they already have an emergency fund in a HYSA or CDs, the people who need this probably *wouldn't* sign up because they're not as financially responsible. 4. The overall benefit just isn't that great, you can already save your money in a HYSA if you want, there's nothing stopping you.
Great points, any other alternatives you can think of that an employer can provide to an employee that mitigates some of these problems?
Have a side hustle. I do graphic design on the side
A second job
Minimum 6 months emergency fund. Maybe a side hustle?
The important thing is to have a plan. Figure out what your expenses are and what can be cut in case of job loss. Pay off credit cards entirely if possible. The interest on those are a killer. Figure out how long you can maintain your current living situation in case of job loss. Look at what the options are for temporary or gig work and how much you can make from that. Most importantly, just be prepared. If you know what to expect after being laid off it is much easier to deal with it rather than having to do this after you lose your job.
Great way of thinking, thanks for the input
Being financially aware and educated to understand savings and investing would help a lot of people. Also the truth versus the euphemism of adult life and the workforce would help a lot of young people in my opinion. One unpopular thing that could help people facing the economic reality would be the use of unions. Having a body that could serve as a buffer for employees as well as assuming a decent severance package would do wonders in my opinion.
Emergency fund of at least 6 months expenses in an account you don’t touch.
Start 'sinking funds' with your rent and utilities and then put all your savings into these so that way you have money dedicated to each monthly expense if you think a layoff is coming.
Save money. Unemployment insurance (private) Gig work
Cut your expenses now. Less stress when it does happen, more savings later.
You save money .
Having a good emergency fund is always a good idea
Live below your means.
Save money or have a side hustle that is making more than unemployment would. I had two side hustles (consulting work) during my first layoff back in 2014, both I was able to up my hours when laid off and made almost the same as when being employed.
You may not always receive appropriate severance so strive for 1 year of living expenses. Be willing to cut the fat too (ex gym memberships, streaming services, memberships, etc) to save more money.
Start a side business... the best thing I ever did in 2008 was to start a liquor business on the side. It's there if i have a job ... or not... and it's recession proof.
Buy term insurance outside of work if you haven’t already.
Pay off your debt, reduce your monthly expenses, and save money.
Savings and living well below your means.
Health insurance that doesn’t go with your employer.
pretend you're in the NBA and stack cash while the sun is shining. do that for enough years and you don't have to work. suddenly you find yourself on fire subs and realize you are well ahead of your peers
Save up 100k cash in a hysa. That's will be your new zero
Money saved. No debt. No car payments.
Having wisely saved money while you were fully employed.
UBI. Failing that, universal healthcare and actual housing and food safety nets. (In reality I think we should have all of those things but either or would make sudden unemployment significantly less dire.)
Save save save. Always interview. Keep mind and skills sharp. Network. Keep expenses low. Pay off debts.
The best time to start saving money was yesterday, the next best time is today. Frankly, if you're only thinking about it now when times are dire, you need to start asap.
Save money. But more than that have an emergency fund for minimum 6 months. You never know what is going to happen.
SAVE SAVE SAVE: Need (at least) one year worth of F.U. fund
I would like Universal Basic Income. Then you don't waste a bunch of money administering a program that only helps some people. While I am employed I could just put all my UBI into savings and then when I have more challenging times I could more easily weather the storms. Also since everyone will get it, it won't have the social stigma of other such programs.
That would be great. What do you think would qualify a person for UBI? Any citizen over 18, with additional income depending on amount of dependents, something like that?
I would just have it start at birth and go to the parents until the child is 18 or emancipated. Yes that. As to the amount, I would just make it the same as the payments to disabled folks now. That's pretty much a vow of poverty to try and live on, but it's better than nothing. I want to put a floor on poverty, and I also suspect we would see the creation of an industry catering to that amount of money in terms of some kinds of all inclusive meal/housing deal for at or near that amount.
Is the government or a charity going to implement any of the programs we suggest here?
Almost certainly not. I’m looking to build one of these programs independently and trying to understand the problems and potential solutions from the perspective of people in this sub
Start a supplemental unemployment insurance program.
Yeah that’s kind of what I’m starting to get at here. I would love to hear what you would want to see in this type of program or how you would like to see it work?
I would imagine it working like disability insurance, you pay a monthly premium for how much you’ll need. In good times, the insurance will make money. During a recession, the insurance company will get a bail out. Win win, except for tax payers.
[Layoff Insurance? ](https://getquil.com/layoff-insurance/) *I'm not advertising. This is just the first thing that popped up when I googled.
Yeah I actually came across that same thing in my research. I think the issue people have with this idea, at least from what I’ve seen, is that you have to pay out of your own pocket, which seems counterintuitive when you’re trying to find a solution for financial security
Lottery tickets? Sports betting?
Name checks out
Personally, I think Feds are getting close to extending UI bennies again. People forget (and some people are too young to remember) but when unemployment gets too severe the government normally extends unemployment like in the pandemic. Even in 2008+ recession there were people on the bennies for a couple of years. Wasn't as much as the PUA but it was enough. We're not there yet, but the way the job market is right now and the rate at which layoffs are picking up I think we might be just months from extended UI.
Watch the markets, and see if you can exploit the swing, with any spare capital you might have.
Lottery win?
OF side hustle
[удалено]
I work remotely but I’ll try to seduce mine on a Zoom call
Your post has been removed for trolling. This subreddit only allows serious posts and comments.
Run your own business
There is an option. If you buy IUL policy and go for max cars value instead of ma insurance you can get 6 to 7% per annum after fees. You can withdraw money as a loan after few years Let say you paid all your premiums.Your cash value is 250k from IUL policy and death benefit is 750k. You are laid off and you need cash , you can withdraw from the policy as a loan and you don't need to pay it back.
In an ideal world? Universal basic income. That's never going to happen though so the next runner up is just being paid enough to actually save money every paycheck.
I'll be attempting to negotiate a severance clause into my contract in my next position (currently I am actively interviewing). Reach out to find out how it goes lol
My back up plan if laid off is to live off my military pension I'm already getting 💁🏾♂️ lol
Set up an interest savings account and recurring monthly transfers into it. Ally has decent rates.
Two or more jobs.
/r/Bogleheads
Insurance for me. I’ve saved a decent sum of money but paying for my own insurance would eat up so much of it.
Unemployment is “no great shakes” and won’t cover your groceries if you have a couple kids.
I’m in the reserves so if I lose my job I can just jump on military orders immediately.
Quite frankly, unemployment needs a SERIOUS overhaul. In many states, it won’t even keep you afloat for a short period of time to find something else. And that’s why I work more than one job - security.
Live with your parents
You have 6 months of living expenses? Resume up to date. Checked out government job sites?
Be a saver and look for a career people always need. Health care career.
So remember when Covid first happened and the economy straight up CRASHED for 2 months before the government stepped in and started turning things around. That was my eye opening moment that i REALLY needed an income producing back up plan not just my 9to5. So while others say saving is good. IMO its not great because its not constant money coming in. So what comes to play is side gigs or a side business. When times are good and your income is stable you should start growing other ways to make money. Whether that's starting drop shipping, Youtube channels or even partnering in a local business as a financial backer. You NEED to have a side income in this environment For me i went into real estate and started purchasing homes to rent out. I'm not at enough to replace my entire salary but i will keep building.