Have you lost a job recently?
If your company announced layoffs, would you be prepared?
Having worked in financial services through both the uber-ugly 2001 and way-ugly 2008 financial crises, lay-offs are a part of my working life DNA.
NBC News recently shared a story about the proposed layoffs of Allentown-based, PPL workers, and I found myself wondering if they would be prepared like my financial services cohorts.
Layoffs Can Be Ugly and Sudden
A year after I graduated from college, many of my 23 year-old friends in financial services received pink slips and figured out how to apply for unemployment benefits. This wasn’t a skill that many of us planned to acquire so early in our career paths; however, the Internet bubble officially burst, banks were losing money, and the easiest people to lay off were the most recently hired.
Watching my friends work through their lay-offs profoundly affected the way I viewed my role in a company. I realized early on that no one was safe. Because of that, I always had my Plan B ready to go.
After the housing collapse of 2008, I was again confronted with watching friends and co-workers manage through unexpected lay-offs. The problem this time around?
It was no longer just the first ones in that were getting letting go.
I watched people who had committed decades of their lives to the company get escorted out the door as though they were common criminals.
There’s No Such Thing As “Security” Working For Someone Else
If I wasn’t prepared before to accept that no one was safe, watching a mass of teammates experience this level of humiliation really kicked me in the butt and I began the steps to start my own company. so that I would not find my career and livelihood subject to the whim of one employer.
When I work on financial plans with clients, I always want them to prepare for the absolute worst. Even if they work for the most profitable and successful company in the world and they are the most critical cog in the entire system, I want them to be prepared for the pink slip.
I have witnessed friends and former colleagues experience months and sometimes years of unemployment before they re-enter the workforce. Unemployment benefits and severance packages can only support you so long, after they run out, all you have left is the preparations you made while you had the job.
That’s why the number one focus I have with clients is the investment in a robust emergency fund.
How much is enough? I like to see six to eight months of monthly expenses saved and readily available to weather unexpected financial disasters.
You may not lose your job; however, $1,000 surprises happen more often than you can imagine.
I hope these latest PPL employees have prepared for this possibility, and for those who haven’t, I hope it inspires you to prepare for this possibility of it happening to you. When you work for someone else, you are at the whim of your employer, and despite the fact that you feel safe in your job, a best practice is to make sure you are safe without your job as well.
If you lost your job tomorrow, would you be ready financially to weather the storm?
Although I didn’t prepare for the worst when I was cruising along in my full time job, I was doing the basic savings which really helped, and I managed to put away a ton in the period that I knew we were going to be laid off, but somehow that still didn’t protect me from being stupid enough to blow through it those first couple years by not budgeting and managing my money correctly. I think I was way overly optimistic…now I’m WAY more cautious, but I sit and watch friends make financial decisions which sometimes make me scratch my head. I guess we all learn in our own time.