What to do if you get laid off?

It’s a hard pill to swallow. Imagine opening your inbox to find a notice that you’ve been laid off. Unfortunately, in Malaysia, almost 160,000 people lost their jobs due to the Covid-19 pandemic. When you’re laid off, you’re not going to be in the clearest state of mind. Losing your main source of income is not only stressful but also emotionally draining. Although it might be really tough to get started, it’s vital that you plan your finances effectively during this challenging time. In this guide, we’ll walk you through the first five steps to getting your finances in order after being laid off.

1. Process Your Emotions

I know this doesn’t seem directly related to finance, but hear me out. When dealing with job loss, your emotional state will undoubtedly be affected. Even though it’s not directly linked to your finances, how you feel can heavily influence your spending habits. You might be tempted to go on a shopping spree to numb the sting of losing your job. But before you do, I urge you to take a step back and process your emotions first.

Layoffs usually happen when companies need to cut costs due to various reasons beyond our control. In other words, it’s not your fault, you’re not incapable, and it’s definitely not a reflection of your work performance. So, take a week or two to properly grieve your job loss—preferably without the retail therapy.

2. Review Your Finances

The next step requires you to take a good, hard look at your finances. Try to get an estimate of how long you can sustain yourself without an income and figure out ways to cut corners to reduce your monthly expenses. You’ll want to prioritize your spending to cover essentials like housing, food, and healthcare, and consider postponing or eliminating non-essential expenses like entertainment subscriptions.

Depending on your industry and your tenure, it’s important to make sure you receive everything that’s rightfully yours. Find out what is included in your severance package. Remember to submit your claims for any work-related expenses, like money for travel or parking fees.

3. Get Some Alternatives Income Streams

In the midst of your job search, it’s a good idea to come up with alternative income streams to help you along the way. Consider taking up some part-time work, or leveraging your professional skills through freelancing on platforms like Upwork or Fiverr. 

Go through your old stuff and sell items you no longer need. You’ll be surprised at what people are willing to buy. You can market your preloved clothes, shoes, and collectibles at thrift stores or through websites like Mudah.my or Carousell, which make selling second-hand goods convenient and accessible. Additionally, you could even turn your passions into profit. For instance, you could sell handmade goods online, offer cooking classes, or sell your photos on stock photography sites.

4. Build Your Budget

During your period of unemployment, you’ll have to stretch every ringgit you’ve got, so be sure to buckle down on your monthly expenditure and cut back wherever possible. Use a budgeting app to help you keep track of your spending.  It’s important to practice restraint when purchasing non-essentials, as unnecessary expenses can really break your budget. If you have emergency funds set aside, this is probably the time to dip into it. Generally it’s recommended to have at least three to six months worth of living expenses set aside for a rainy day. 

5. Reduce Your Debt

Moving on to debt, try to pay off any outstanding loans or credit card balances to avoid accruing high interest rates. Try to pay what you can afford towards your credit card, as credit card interest can add up due to compounding interest. Focus on keeping your balance low. Keep in mind that extra charges are added when you miss payments, but you can minimize this by paying at least the minimum amount every month.

If there are any outstanding loans that you need help with, contact your bank early to inform them about your financial difficulties. Explain your situation to them so they can work with you on a viable solution. Banking institution typically consider requests and restructure loans to accommodate borrowers within reason. Remember to back up your requests by providing your bank with supporting documents as proof of your financial situation. 

[Read more on how to pay off your debts here.]

Bonus Tip: Try to Apply for Financial Aid

Depending on the nature of your job loss, check if you are eligible for unemployment benefits (EIS). EIS is a programme that was set up to offer financial aid to employees who lost their source of income, to help ease the process of job search by providing financial assistance until a new job is found. 

If you’re eligible, you must submit your application within 60 days of your unemployment. If you haven’t already, register at the EIS Portal or a SOCSO office near you (prepare the required documents, such as your NRIC, termination letter, payslips, and bank account information). Alternatively, you can contact customer service at 1300-22-800 for further assistance. They can guide you on the eligibility criteria and which benefits you qualify for. The sooner you reach out, the sooner you can get the support you need. 

Conclusion

Facing a layoff is undoubtedly one of the most challenging experiences in one’s professional life. However, you can mitigate the impact by taking control of your finances to maintain stability during this transition.

Remember that getting laid off is not a reflection of your worth or capabilities; it’s simply a temporary setback. Use this time to reassess your career goals, reskill or upskill yourself, and explore new opportunities. Financial preparedness is more than just surviving; it’s about setting yourself up to thrive in the long run. By staying calm, you can turn this challenging situation into a stepping stone for better opportunities. Keep pushing forward, and you will find your way to a new and rewarding chapter in your professional journey. All the best!

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