Losing a job can be devastating. After all, we live in a country where our first question upon being introduced to someone is, “What do you do?” What we DO is work, even if we have a novel tucked away in our laptop or we volunteer at the food bank or we’re president of our kid’s PTA. What do you do? Where do you report to earn money?
When we lose our job, we lose our identity, and that hurts. Suddenly, you don’t “do” anything, though you’re scrambling more than ever before to make life work.
Your first thoughts upon getting the bad news might be about identity issues, as you wonder who you are without your work persona. It won’t be long until your thoughts turn to the real reason we work: money..
Scenario #1: Your job is eliminated with notice
When I lost my job, I had several months’ notice. My job loss came in the form of the non-renewal of a teaching contract. But sometimes job loss is much more abrupt. We show up at the workplace and find a sign on the door, or we’re humming along at our desk when someone shows up with a security officer and a box.
It’s much easier to face the situation with some advance notice, because when you’re forewarned, you have time to make some advance financial preparations, like cutting out unnecessary spending, putting some money aside and taking a strategic approach to paying bills.
Since I knew I would be losing my job, I started taking extra money and putting it toward accounts I could pay off and be rid of. With the money that I saved from eliminating shopping and dining expenses, I tackled some credit cards with low balances (but monthly payments), and I also paid off what remained of my car loan. When the money stopped coming in, I would be responsible for a few hundred dollars less in monthly payments.
I also put aside some savings each month so that I would have a buffer in case there was a long time between jobs. I was lucky, because I found classes to teach at three other institutions, and with quite a bit more work, I made about the same pay.
I was not in a position to save a lot of money while still paying off debt, so I had to prioritize with a mind toward which financial moves would make the biggest difference for me. Spoiler alert: There were no good answers. I was in scramble mode, and nothing I could do would prepare me for long-term unemployment. The steps I took were helpful during the transition, though.
A recap: What to do if you’re let go with notice…
- Pay off bills you can eliminate. If you can pay off a $300 credit card bill and avoid a $50-per-month payment, that’s $50 more you’ll have when you’re no longer working. Pay it off.
- Determine what you can save, and make a buffer for yourself while you’re hunting for a replacement job.
- File for unemployment. You probably qualify, even if you were a contract worker, like me.
- Don’t waste valuable time nursing your hurt feelings; start looking for a replacement job immediately after learning you will soon be unemployed. (OK — take a day or two to cry. I did.)
On the lighter side

Scenario #2: Your job is eliminated today
I have a friend who worked at a high-security tech business. I was never really clear on what she did, in fact; she wasn’t free to talk about her work, either while employed or after. But she did tell me about the day she learned she was being let go.
Because of the secretive nature of the company, she was not given advance notice of her termination. Instead, her employer showed up at her cubicle with a sympathetic look, kind words, and the clear instructions that she was to leave the workplace immediately. She would not be permitted to come back for any belongings, so the boss provided a lidded box that had held copier paper and watched while she packed up her personal items: pictures of her children, a mug, some crayon drawings.
Suddenly, my friend was outside of the locked door of her building with no security tag to get back in. I can’t imagine how she felt when she was walking to her parking spot for the last time. It must have been devastating.
While I’d had a chance to prepare for my new financial reality, my friend did not. On the plus side, she was eligible for unemployment, and she took the savvy step of applying right away. This should be an obvious first step for anyone who loses a job, but a lot of people forget about this benefit, or they assume that it doesn’t apply to them. Employers must pay into an unemployment fund for their workers, though, and this is money that you have earned through your hard work.
What to do when you lose a job suddenly …
- Make an immediate assessment of your situation. How much have you saved, and what savings can you safely tap into? Don’t rob from your future by raiding your 410k; this should be an absolute last resort.
- File for unemployment.
- Assess your expenses. What are you paying for that you can do without? Can you adjust your thermostat and wear a sweater in the winter months or run a fan in the summer? Do you need your cable package or every one of your streaming services? Be ruthless for now; cut expenses where you can.
- Check your recurring automatic payments and eliminate what you can. I was paying for a membership in an educational website for my preschool-aged child until he was in second grade. I just forgot to cancel. Do you have little extras you can cancel, too?
- Where else can you save? Do you need full auto insurance coverage? Can you temporarily forego a gym membership? Is giving up childcare a viable option? You have a new reality; maybe some of your old expenses no longer apply.
- Join the gig economy. People everywhere are being creative about making money. You can rent out a room, drive for a service, make and sell items (the coronavirus pandemic has created a cottage industry for cloth masks, for instance), tutor students — or you can try marketing your services through online sites like Fiverr or Upwork.
Talk to creditors. Maybe you have insurance against job loss for certain credit accounts. (I did, and I completely forgot that I had paid into this option.) Just pick up the phone and explain your situation. I found that there was help in unexpected places.
- Hunt for your next job right away. There is no time to spare, especially when the unemployment rate is high. You may live in a state with job service centers that can provide resume help or employment fairs to those who need them. Waste no time in making contact with those people. There are options you’re probably not even thinking of.
If you could go back in time…
Maybe you’re happily employed, and you’re just reading this article because you have a ghoulish interest in considering the worst possible outcome. (Don’t. I mean, read away, but always picture yourself in your highest and best situation in life, because that vision has power.)
If you’re happily employed and have no reason to presume that situation won’t continue, take note of the examples here and prepare yourself for the unexpected.
Here are a few things you can do now, just in case:
- Start a savings account, separate from your retirement fund. Some experts say we should have six months’ worth of earnings squirreled away — but I kind of wonder what planet these people live on. It’s a good goal, though, especially if you manage to live without a lot of debt.
- Keep your resume and LinkedIn profile updated, and stay in contact with people you may need to list as references. Consider pursuing any free training you can to update your skills.
- Watch your finances. If you see automatic payments that you can eliminate, get rid of them now.
- Don’t define yourself by your job. That’s a relationship that can end in an instant. Keep your focus on family, friends, fun, and personal growth opportunities, and while you should try to do your best work, don’t make your job the center of your existence. One day, it may be gone.