Mergers and acquisitions cause companies to downsize all the time. And they can upend both your career and your finances if you’re not prepared.
The good news is you usually get some advance notice. It’s up to you to be proactive and start laying the groundwork to either keep your job in the face of cuts or to find a new job before the ax falls.
But there are ways to come out ahead if you start the moment you learn your job stands on shaky ground.
Preparing Before You Lose Your Job
Before you go on a resume-sending binge, look closer to home. Neither your budget nor your income is fixed, and the first step of the preparation process involves a close look at your finances.
Start with these steps to prepare your finances for a job loss, even as you begin thinking about what comes next in your career.
Cut Your Spending
If your job isn’t safe, then is now really the time for that $3,000 vacation or new living room set?
Of course not. Yet many people keep spending like they always have.
And significant discretionary expenses are only the beginning. The real meat of budgeting lies in your recurring monthly expenses.
From your housing costs to transportation to food to entertainment to clothes, put every single expense under the microscope. Then put as many as you can on the chopping block.
Start by analyzing all your budget categories, and work to bridge the gap between your current budget and your tighter ideal budget.
Pro tip: Sign up for a service like Billshark to help reduce your monthly expenses. They will negotiate your bills and look for recurring subscriptions you no longer need.
Build Your Emergency Fund
It’s also time to maximize your savings rate and funnel as much money as mathematically possible toward savings. Your goal: to build the largest emergency fund you possibly can, because you suddenly have far greater odds of an emergency bearing down on you.
Beware that it could take you months or even years to find a new job. If your emergency fund can’t carry you that distance — and most people’s can’t — you need to get serious about savings.
In a worrying trend, older workers are particularly vulnerable to layoffs and forced early retirement. Even those who find a replacement job often never achieve their previous income heights.
I’ve seen it happen with several of my uncles when they reached their 50s, and thought that their long history with a single employer meant job security. It doesn’t: anyone can get the axe at any time, especially people at the peak of their earning years. So don’t get cavalier about your lifestyle and savings, because both could get permanently pinched.
Diversify Your Income
There’s an old saying that the average millionaire has seven separate sources of income. While I don’t know of any statistical data supporting that number, to focus on the exact number is to miss the point entirely.
The wealthy diversify their income. If they lose one source, it stings, but it won’t put them on the street. They earn money from dividends, rental properties, businesses, private notes, and a dozen other passive income sources.
Now could be the right time to turn your hobby into a money-making side business. Or to pick up some other side gig, move money from growth stocks to higher-yield dividend stocks, or start renting out rooms on Airbnb. For that matter, if you’ve been thinking about expanding your part-time business to full-time, this could be the perfect kick in the rear to do it.
I know a man who saw the writing on the wall for his department, predicting that his company would outsource it overseas. He started looking for a way to replace his income, and discovered land investing. Over the next 18 months, he built a land flipping business that completely replaced his income.
When his company did announce they were closing his department and laying everyone off, he hid his grin and negotiated the best severance package possible. He hasn’t worked a full day since, and earns far more than he did at his corporate job.
Even if you have no interest in retiring early, start learning the strategies behind financial independence. You have dozens of tactics at your disposal. But the goal is the same: reduce your dependence on your job as the only way you can pay your bills.
Do What You Can to Protect Your Job
Managers keep the most productive workers, the workers who collaborate best with others, the workers with the best attitudes, and the workers they know the best. Which means if you want to be among those kept, you need to focus on your relationships and your performance at work.
Look for ways to increase your visibility and build closer business relationships without being obvious about it. Chat up your coworkers when you bump into them in the lounge or at the watercooler.
Look for ways to establish more rapport with both your bosses and your colleagues, by finding common ground. Do they read the same types of books as you? Watch the same TV shows? Enjoy the same hobbies? Love the same foods or drinks or obscure collectibles?
Beyond building closer relationships, get clear on how your employer measures your performance. Ask your supervisor for a few minutes of their time to get a better sense of your current performance, how you can improve it, and how it’s measured.
You don’t have to beat around the bush. Try something like, “Hey Bob. I wanted to check in with you about how I’m doing and what you’d like to see me do more or less of. I like this job. I like working with you and the team and would love to expand my role around here.”
As the conversation takes shape, ask, “In my next formal performance review, what metrics do you use to evaluate my performance?” It’s hard to improve if you don’t know what they’re looking at.
You can then start keeping a log or spreadsheet of exactly how you create value for your employer. If they don’t track your metrics themselves, then periodically find an excuse to show them exactly how well you’re performing.
Pick up new skills and certifications. Stay on top of continuing education in your field. Read industry newsletter to stay in the know.
Even if your job isn’t in jeopardy, demonstrating value will help position you for a raise sooner than your colleagues.
Look for a New Job While You Still Have One
In one of life’s bitter ironies, it’s much easier to find a job when you already have one.
Start by updating your resume with all your current job activities and accolades. Outline the success metrics you’ve been tracking to illustrate how much value you’re bringing your current employer. Avoid corporate jargon and insider acronyms. They don’t make you look smart or sophisticated — quite the opposite.
But your resume updates are the beginning, not the end. Ask around to find at least two people to give you feedback: one person in your industry, and one person who frequently reviews resumes and makes hiring decisions. Ideally, send them an electronic copy of your resume, and then schedule an in-person meeting or phone call for them to provide feedback on how you can improve it. Wrap up the meeting by asking permission to send them your revised resume.
After making their recommended changes, repeat the process until you feel confident you have a modern, eye-catching, must-reply-to-this-candidate resume. To increase your odds, take it a step further and hire TopResume to review it, or hire a career counselor to help you land a job.
To find jobs that aren’t advertised, get friendly with as many people as possible in your target industry. Ask everyone you know about people they can introduce you to. Attend industry networking events. Go to industry conferences. Take people out for lunch, coffee, or happy hour drinks. To melt their defensive barriers, look for ways to help them first.
And no, being introverted is no excuse. There are plenty of networking tips for introverts if you struggle with building these relationships.
After the Ax: What to Do After Being Let Go
Sometimes, you run out of time and lose your job before you can line up a new one. If the worst happens, there are plenty of ways to bridge the gap.
Negotiate Your Severance
Upon getting fired, many people feel either blank paralysis or indignant anger. But the last thing you want to do is yell and scream at your former boss or just sign whatever they put in front of you and retreat in stunned silence.
If the axe falls, simply say, “I understand. I’m going to sleep on it and will get back to you about discussing severance.” Give yourself a day or two to rein in your emotions, then schedule another meeting with your boss.
Common practice is to pay two to four weeks’ worth of pay for each year an employee has been with the company. As a starting point for negotiations, ask for four weeks’ worth of pay for each year.
But money isn’t the only benefit on the negotiating table. You can also or alternatively negotiate for continued health benefits, a favorable reference and “exit message” — the reason they let you go — career counseling, or even contract work with the company.
You don’t want to leave on bad terms. But you should still use the best negotiation techniques you can to secure a favorable deal. You need all the help you can get when you’re facing extended unemployment.
Cut Your Spending Even Further
Hopefully, you already restructured your budget to slash spending. Either way, now is the time to gut it entirely.
Eliminate every single discretionary expense. You need your emergency fund to last until you find a replacement job.
Start with these 12 expenses to cut for over $12,000 a year in savings, and don’t stop there. Get as creative as you can in reducing expenses. I’ve known people who get their dental work done at dentistry schools; buy all their clothes, furniture, and electronics used; rent out bedrooms in their house; and bring in foreign-exchange students for the stipend.
Nothing is sacred at this point. Your kids may need to go without their karate lessons for a little while. You can go without your luxuries — no dinners out, no spa days, no new clothes or accessories, no entertainment that costs money.
Declare martial law on your household spending until the emergency passes.
Make Sure You Have Health Coverage
There are a few types of insurance that everyone needs, and health insurance is one of them.
If you lost your health insurance along with your job, start exploring options to bridge the gap between now and when you find your next job. Fortunately, you have many options for health insurance without a job in today’s world.
You can also fall back on COBRA. The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires health insurance companies to allow workers to remain on their current health care plan for up to 18 months after leaving their jobs. But without an employer subsidy, the premiums can add up quickly.
All the more reason to go on a cost-cutting spree elsewhere in your budget.
Move Your 401(k) to Your IRA
It doesn’t count toward your annual contribution limit, so have no worries on that front. Once rolled over to your IRA, you have complete ownership and control over your investments.
You don’t technically have to roll over your account. But if you don’t, you run the risk of forgetting about it decades from now when you retire. You also sacrifice having full control over your investments, and allowing your asset allocation to drift.
Reevaluate Your Career and Lifestyle
Do you even like what you do for a living?
The overwhelming majority of people don’t. In fact, a 2017 Gallup poll found that 85% of workers worldwide hate their jobs.
Don’t go through the hassle of finding a new organization doing the same work you don’t actually like. Now is the perfect moment for you to reevaluate what you want in your career.
Start by going through the steps to explore and prepare for changing careers. Take a holistic view of salary, benefits, location, compatibility with your lifestyle, and, most importantly, what kind of work you find fulfilling.
And don’t be afraid to go unconventional in your job search. For example, try looking into jobs that provide free housing. One guy hated his job so much he looked for the farthest possible place he could go. He ended up living in Antarctica for a year at a research station. He had some killer stories to tell when he got back to the U.S. too.
Life is too short to spend one-third of it doing something you hate. Forget the Joneses and do what you want to do, even if it means fewer dinners out and a slightly smaller house.
In fact, start with your desired lifestyle, and plan your career around that. Invest some time on lifestyle design before plotting your future career trajectory.
Redundancies, reorganization, and consolidation aren’t the only threats to your job. With technology shifting faster than ever before and more jobs under threat from automation, few jobs are as safe as we like to think when we try to sleep at night.
Your company could simply suffer a downturn in profitability, or the corporate culture could shift with new senior executives. Or maybe the plod-along attitude you’ve developed in recent years just doesn’t cut it anymore with your bosses and other staff members.
Your career is a living thing, and it’s your responsibility to care for it and help it grow. Far too often, we become lax and comfortable, ignoring our career growth until we’re blindsided by the news that our job is suddenly under threat from restructuring or downsizing.
Get proactive and start looking at how you can cultivate your career again. Improve your skill set, demonstrate your value to your employer, look around at what else you might want to do. Now’s the time to improve your career prospects. And remember: It’s never too late to change careers.
You’re only limited by what you believe is possible, so stop fretting and start dreaming bigger.