A layoff has the power to upend your life. It can feel like the career equivalent of gale-force winds, knocking down your confidence and blowing the roof off your sense of financial security. Though many layoffs are simply a matter of raw economics rather than an indictment of your abilities, being let go can still leave you feeling financially vulnerable.
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While there’s nothing that can fully prepare you emotionally, financial experts like Suze Orman do believe there are some key steps you can take to buffer your finances against a potential layoff. If you’re sensing that a pink slip could be a possibility, Orman says there are specific moves you can make right now to protect yourself.
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Build Up Your Savings
Regardless of whether you suspect a layoff is imminent or simply want to be prepared, the time to start saving — especially building up your emergency fund — was yesterday.
Orman wants you to have at least eight months of living expenses in a federally insured bank or credit union. She advises keeping your emergency savings in a high-yield savings account where you can accrue interest and withdraw your money without penalties.
Another tip? Orman warns against putting your emergency savings in the stock market or relying on a home equity line of credit. Banks may deny access to credit lines during economic downturns.
Clear Your Debt
After building up your emergency fund, allocate some of your income to paying off your credit card debt. You can even start by calling your credit card company and asking them to lower your interest rate. There’s no guarantee it will work, but Orman says you’ll be surprised by how often it does.
Small steps, like adding an extra $50 to your monthly payment, can help make a dent in your debt. You may also want to consider doing some research, including chatting with a financial advisor, to explore whether a balance transfer, debt consolidation, or personal loan could be a useful option to help you pay down debt faster.
Cut Back on Your Spending
This advice seems commonsense enough when facing a layoff, but stress can often lead people to overspend. Now is the time to do a complete inventory of your spending and identify where you can make cuts.
Orman is a strong advocate of living below your means and redirecting savings toward building up your emergency savings and paying off credit card debt.
Consider Side Hustles
If you’re concerned about a future layoff, you might consider taking on a side gig to pad your income. There are plenty of ways to generate extra cash, from renting out your car to delivery driving, completing online surveys, or monetizing your creative skills.
Just be sure that any side gig you take on doesn’t interfere with your ability to collect unemployment if a layoff occurs.
Remember Your Strength
A layoff can be demoralizing, damaging your relationship with yourself and with your finances. Like any difficult situation that impacts your money, recovery requires you to dig deep and believe in yourself.
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Having confidence in your abilities is central to Orman’s advice. In a blog post on handling financial stress, she shares the following wisdom: “Reducing your financial stress starts with reminding yourself that you are strong, you are capable, and you have what it takes to build a more secure future,” she writes. “You can’t rewrite the past. You can’t undo the past. But you sure have 100% control over how you navigate the future.”
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This article originally appeared on GOBankingRates.com: Suze Orman: 5 Financial Steps To Take Now if You’re Worried You May Get Laid Off
