What to Do After Losing Your Job

Man with backpack standing on bridge looking thoughtful.

There are few feelings worse than losing your job. It’s a panicky, anxious feeling, often mixed with dread and shame. However you may feel about your job, as long as you have a steady income most problems feel manageable. When that’s gone, it can feel like the tide’s about to roll out and drag you off to sea.

It’s a terrible way to feel, but there’s always something you can do. Creating a plan and taking real action is the best way to combat that negative feeling and put yourself in a position to weather the storm. If you ever find yourself facing an unexpected unemployment, consider the following steps to be your unemployment checklist.

Decide between resignation and termination

How the job ends matters. If you find yourself able to choose between voluntarily resigning or being fired, think carefully before choosing. In certain instances if a work situation is untenable and the writing is on the wall, you may consider resigning in order to avoid the potential stigma of having been fired. Sometimes an employer may inform you that you are being fired and then offer to let you quit if you’d prefer. It seems like a kind gesture, but usually it’s nothing of the sort.

Voluntarily resigning may make future job interviews less tricky, but by doing so you also forfeit your right to unemployment benefits. Which is more valuable to you – the unemployment check or the job reference? Be clear on what you’re agreeing to and what that impact is going to look like. In the immediate aftermath of learning that you’ve lost your job, you may make a snap decision based on the high emotion of the moment. Take a little time before deciding. It makes a big difference.

Process the situation and communicate with the household

Job loss may not carry the same emotional weight as the loss of a loved one, but it is a loss. It’s natural to grieve and it’s normal to feel sad, even if you didn’t even like the job all that much.

In the immediate aftermath of experiencing job loss, it’s important that you allow yourself the space to process what’s happened. A job is – for better or for worse – a significant part of our identity. And when that goes away it can be hard to manage all the many painful feelings that creates.

You may not feel like talking through your experience, but try not to go through this alone – especially if you have a family that wants to help.

And to that end, it’s crucial that you be honest and open about the situation with the members of your household, especially if you’re one of the primary income earners in the family. Not everyone is comfortable talking about money and you may have reservations about letting your kids know what’s happened. But the fact of the matter is that you’re all in this together. And it’s so much easier to manage these kinds of sudden, difficult shifts when you’re all on the same page.

File for unemployment

After learning that you’ve lost your job, one of your top priorities should be understanding what benefits are available to you and re-establishing some form of income. You’ll inevitably want to cut back on your spending (and we’ll get to that), but reducing your spending can only do so much if there’s no income – especially if you don’t have an adequate amount in savings (and most of us don’t).

Are you eligible for unemployment?

Unemployment insurance is a financial safety net managed by state governments to help workers as they transition from one job to another. It’s not a one-to-one replacement of your previous salary, but it’s money and you want to re-establish income as quickly as possible.

Your eligibility for unemployment benefits will be determined by the guidelines in your state of residence. Generally speaking, however, most states require the following:

You were laid off involuntarily – If you quit your job or were fired for misconduct, you’ll be much less likely to qualify for unemployment insurance.

You meet the base requirement for tenure and earnings – The metrics will vary from state-to-state, but you may not be eligible if you didn’t have the job long enough, work enough hours, or earn enough income.

You’re actively looking for a new job – Because unemployment insurance is meant to be a temporary measure for workers between jobs, most states will require some evidence that you’re looking for new job.

Whether or not you’re sure that you qualify, visit careeronestop.org to get information on the requirements for your state and a directions on how to apply. Unemployment benefits may take some time to kick in, so start this process immediately.

Can you temporarily pivot to a new line of work?

It may take some time to find a new long-time career, but in the short-term, you may be able to find a temporary source of income to help supplement any unemployment benefits or savings you may have.

Everything should be on the table. Selling unwanted or unneeded assets can help buy time, but finding a steady source of income can really go a long way toward stabilizing the situation and reducing some of the anxiety that comes with losing your job.

Fortunately, we live in a time when side hustles are somewhat easier to find. If you’ve ever considered dipping your toes in the gig economy, now may be the best time to start.

Contact your creditors

Even with unemployment benefits, your money is going to be extremely tight until you find a new job. And when you’re in a financial crisis, one of the first expenses to suffer is going to be your creditor payments.

Get out ahead of that inevitable issue by contacting your creditors directly to let them know about the situation. Many creditors offer short-term hardship programs that could significantly reduce your payments for six or 12 months. Some may even let you miss a set number of payments. (It’s important to note, however, that in most of these hardship programs interest continues to accrue, meaning you won’t fall behind, but your balance may increase.)

See what your creditors can offer you. Some won’t be able to do anything for you, at which point you’ll have to weigh the cost of keeping your accounts current against the more important cost of maintaining your household. But at the very least, you need to pick up the phone and see what’s possible.

Reduce spending and create a new budget

Even if you’re eligible for unemployment benefits, and even if you have a sizable emergency savings account, and even if you find a way to start up a temporary gig to keep at least some income flowing, you’re still going to need to reevaluate your spending in the event you lose your job.

Look for easy budget cuts

The first thing you’ll want to do is evaluate your spending and see where you can easily make cuts. Look at your last few bank statements and review all the charges.

  • Are there any monthly charges you can quickly turn off? (Subscriptions, memberships, automated donations, etc.)
  • Are there any non-essential charges that you could easily reduce? (Entertainment, takeout, etc.)
  • Are there any essential charges that seem high and might be temporarily reduced? (Transportation, home care, groceries, etc.)

Making huge, sweeping changes to your lifestyle is really hard, but hopefully if you find enough small, easy wins you’ll be able to maintain something pretty close to normalcy.

Determine your priorities

Even in the best of times, there’s only so much money to go around. We’re always making spending decisions based on our personal priorities, but when you have less money to work with those distinctions become even more important.

You probably already know that essentials come before non-essentials and your mortgage payment comes before your Best Buy bill, but there’s another level to consider.

For example, you know that food is a priority, but what are your priorities within that category? Are there dietary restrictions? Are there technical limitations to consider? What about simple preferences?

As money gets tight, it can be incredibly helpful to understand your household priorities and make sure everyone is onboard.

Increase your money mindfulness

If you’re intimidated by the idea of creating a new budget, then you can simplify the process by asking yourself a few quick questions before each purchase:

  • Do I have enough to pay for this now?
  • What might I have to sacrifice if I spend this money now?
  • What happens if I don’t spend this money now?
  • What am I trying to accomplish with this money?
  • Is there a less expensive way to accomplish the same thing?

For some people, drilling down into the details is really helpful. For others, that level of work is just a blocker and prevents them for properly dealing with their financial situation at all. Be honest with yourself. If you have disposition to create and maintain a strict “between-jobs” budget, then go for it. If not, that’s okay. Just find the method that helps you succeed.

Prepare yourself to become a job applicant

Being a good job applicant has never been as simple as just having the required skills and experience. As a job applicant you are essentially a product that needs to be sold. And just as cautious consumers do a lot of research before making a purchase, so too do employers research their applicants before making a hiring decision.

Becoming a desirable job applicant begins with a well-constructed resume, but it goes much further. Consider your online presence. We’d like to imagine that our social media accounts are a part of our civilian life, so to speak, and shouldn’t have any bearing on our job prospects, but that’s simply not the case. If it’s online, it’s more than likely public, and you have to assume that the things you post on social media could very well be viewed by someone in charge of evaluating you for a job.

So think about how you present yourself online. Don’t go on Facebook and badmouth the company that let you go. Don’t go on X and say things – even as a joke – that a reputable company wouldn’t want to be associated with. If you need to clean up your social accounts, now’s the time.

Go to work finding a new job

When you’re unemployed, your job becomes finding a new job. It’s time-consuming and often very defeating, but you need to treat your job hunt like the work that it is. Be diligent. Put in the hours. Set aside a specific portion of the day for job hunting tasks and be consistent. If you mirror your job hunting hours with your previous working hours, it can help you to maintain a schedule and avoid the kind of lengthy periods of inactivity that can lead to anxiety or depression.

Don’t neglect your health, hobbies, and relationships

It may be tempting to disregard your health during a period of joblessness, but fight that temptation. Keeping you and your family safe and healthy should always be a top priority, no matter the circumstances.

Maintaining physical health

If you had health insurance coverage in your previous job, you may be eligible for COBRA continuation health coverage. If your former employer was a private-sector business with 20 or more employees, chances are good that they’re required to offer you the chance to continue using your group insurance policy.

The catch is that your former employer will no longer be paying a portion of the costs, so while you may have the same benefits, the policy will now be substantially more expensive.

Instead, you may want visit HealthCare.gov to see if you can find a more affordable plan.

Maintaining mental wellness

Here’s an important thing to keep in mind: You are not your job status.

As you navigate the often difficult process of re-establishing income, it's important that you remember that your job status doesn't define you. It's completely natural (and understandable) to be distressed when you're out of work. It's hard and the longer it goes, the more it wears on you.

That's why you absolutely must be kind to yourself whenever possible. Don't forget—you're reading this right now because you're trying. Give yourself credit where it's due and slack where it's needed. Recovery from joblessness is rarely ever a linear process. And while you can't always control how long it will last, you can control how you treat yourself along the way.

Mental wellness looks a little different for everyone, but here are helpful tips for maintaining perspective and staying in a positive headspace:

Take breaks – If you’re treating job hunting like a job, you should also make sure to give yourself breaks and days off. Allow yourself some time away from the grind. And don’t feel guilty about taking that time to yourself!

Treat yourself – When you’re unemployed, the budget gets pretty tight. As you're trying to keep spending minimal, it's almost inevitable that you're going to feel like you're depriving yourself. To offset that frustration, budget some room for the occasional splurge. Pick a thing that brings you a lot of joy that's outside of your defined essentials, and treat yourself. Even if the money's not there and you absolutely cannot spend on anything beyond the barest of essentials, it's still vitally important that you find free ways to engage with your interests. 

Don't isolate yourself – If you're feeling down about being unemployed, you may not want to do a lot of the things you normally do, or see the people you normally see. While there may be very real financial constraints at work, you should do whatever you can to maintain your hobbies and relationships. When you isolate yourself and completely break from all your healthiest habits, the process just gets all that much harder and lonelier.

Focus only on the things you can control

Finally, during the course of your unemployment, there will be things you can control and things you cannot. It’s natural to worry about things that are out of our control, but try to focus your time and energy on the things you can actually do to actively improve your situation. Let go of everything else. Eventually, with a lot of hard work and determination, you’ll make it through to the other side. But until then, stay positive and stick to the plan.

You're not alone. Whether you've suddenly loss your job or you're back at work but overwhelmed with bills, we're here to help. We offer free financial counseling 24/7, online and over the phone. Connect with an expert and get advice, resources, and a detailed action plan to help you reach your goals.

Tagged in Unemployment, Managing a loss of income, Navigating change

Jesse Campbell photo.

Jesse Campbell is the Content Manager at MMI, with over ten years of experience creating valuable educational materials that help families through everyday and extraordinary financial challenges.

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