How to Protect Yourself Against Unemployment

I love statistics. Last night I decided to go on a hunt to find out about unemployment rates in the United States. What I found didn’t surprise me. Unemployment rates are up. And Oregon has the second highest unemployment rate in the United States at 12.1%. (Find out where your state stands in the right sidebar of the linked page.)

Statistics like that are depressing. So what’s a person to do? Well, you could take a reactive approach and hope unemployment doesn’t hit your household. If it does, you deal with it then.

Or you could be proactive. Prepare for unemployment as if it could happen to you. Hopefully, it won’t. But if it does, you’ll be better prepared. So what can you do?

Make a Plan

Now is a good time to assess your budget. How much money is going out of your bank account each month? Where is it going?

Find areas of your budget that you can easily cut, if you have to. You don’t have to cut them yet. But if you know that you can lose the satellite, landline, and Netflix account if your income is lost, you will be able to quickly take steps to slow the outflow of money, if you need to.

Save, Save, Save

How is your emergency fund doing? If it’s anemic, it’s time to start beefing it up. Try to find ways to save a little more each month.

As someone who’s been through unemployment before, I know that a nice savings account can soften the blow of losing a paycheck. Ideally, you should have 6 months of expenses in your savings account, but any amount is better than nothing.

Between unemployment benefits and a savings account, you’d be surprised how long you can make money stretch.

Be a Model Employee

Make yourself indispensible at work. Show up on time. Be a team player. Do your job to the best of your ability. If your boss is having to make a choice as to whom to lay off, you want to be the one he keeps. If you’re a hard worker with a good attitude, you increase your chances of staying.

Explore Alternate Streams of Income

Loss of income from a job is easier to take if you have other streams of income. Are you a good writer? Freelance on the side. Like sports? Referee soccer on the weekends. Love animals? Offer to pet sit.

Granted, none of those jobs alone will likely pay the bills, but they will help you beef up your savings now, and if you lose your job, some income is better than no income.

Update Your Resume

If you fear your job is in jeopardy, start working on your resume now. You’ll save precious time in your search for a new job, if your resume is ready to go, as soon as you need it. It’s easier to take the time to proof for errors and make sure your resume stands out, when you aren’t under the pressure of finding a new job RIGHT NOW.

Take a Deep Breath

There’s only so much you can humanly do to protect yourself against job loss. If you’ve followed the above steps, you’ve done a lot. The rest is out of your hands.

While that might not seem encouraging, I’m a big believer in rolling with life’s punches. My family learned firsthand that losing a job is not the end of the world. In fact, it can lead to even better opportunities.

The best you can do is take charge of what you can. Try not to worry about the rest. Even if unemployment becomes a reality for you, it’s something you’ll get through in time.



Author

By , on May 4, 2009
Lynnae McCoy I'm Lynnae, wife of one and stay-at-home mom of two. I'm committed to getting out of debt by being frugal with my choices in life.

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{10 Comments}

  1. Kris:

    Michigan, at 12.6% is higher. Not that 12.1% is a good thing, just wanted to point out that there are other that are just as bad.

  2. I live in Texas and, thankfully, we’re not doing too bad. We’re at 6.7% I think it was. The company I work for is growing and we’re doing just fine. That said, I’m not sitting here thinking I’m infallible to the recession, either. I agree that it is better to be proactive rather then reactive. The emergency fund is key. Ideally, 6 months worth of expenses, but I’d say in those states looking at 12%+ that it’s a good idea to have more.

    Something else that is extremely important during these times is networking. You gotta have your contacts up-to-date and you’ve got to know the right people. Join a group, make some new friends, rub elbows with people you’ve worked with before, whatever so long as it’s getting your name and face out there. You never know what opportunities it could bring.

  3. bob:

    I think for people like me and my Wife who are in our 30’s, we’ve already long known what it is like to work in jobs and industries that are completely unstable and not very permanent. In fact, I have on average gotten another job every 1.5 years. I’ve been at my current job longer than any other so far: A little over 2 years. I’ve had no less than 7 different jobs and I’m only 31 years old. In doing so, I’ve become a wise man for my age in regards to jobs and preparing for eventual changes. Here’s some advice.

    A: Have multiple skills and expect having to learn new ones at every job. Every job I’ve had so far has required me to learn totally unfamiliar skills. You build these skills and apply them to your arsenal of talent, which makes you more attractive and able to apply to more than just one type of job.

    B: If you are a low skill worker and get laid off, consider going to college. Let’s face it: The days of working in the factory are probably going to continue to disappear. States like Michigan, Ohio, Indiana, and others in the rust belt are proof of this. Consider community college or night school and learn skills that apply to the current economy.

    C: Don’t overload yourself with debt or get into the line of thinking that you HAVE to have things like a house or whatever if you wouldn’t be able to pay for those things without an income. If only one parent works, definitely consider this because with only 1 working person, come a job loss your family will be in financial trouble twice as fast as a dual working couple. In other words, if you buy a house, think about eh consequences if the one working adult loses a job. If you would be in foreclosure within 6 months… consider renting until enough of a down payment is saved.

    D: If you get a “good” job, or one that pays well, save like there is no tomorrow. Every year that you have a good job should be considered the best working years of your career. Tides can change, industries can fail, and skills required can quickly change fortunes. That and age discrimination is a very real problem. So figure that you have probably a good 25-30 years to earn prime income. That should be the years you save for retirement. A married couple should have at least 30k saved in retirement by the age of 30. That would give you a 40k annual income by the age of 60. That’s really not all that much if you think about it. So again- if you get the “good” job, pretend every day is the last day of that job, save for the future, and prepare for the day you don’t have that income.

    E: If you lose your job, be extremely aggressive with re-applying for a new one. Expect that out of 50 resumes you send out, you might get 2-3 responses. Think of it as dating. Employees are looking for something very specific and if they don’t back to you, don’t get discouraged. Apply every day, but perhaps consider taking one day off per week. Most important is how you write your cover letter. Don’t be generic. Show them who you are. Be memorable. Explain how you will help THEIR business. Make it sound appetizing.

  4. Great post! We closed our business last July and at the time thought it was the end of the world, Now I know different.

  5. jo oliver:

    Arrived here from stumble, wonderful site. stumbled it.

  6. Angelsong:

    I agree, times are stressful enough without excess worry. I remind myself, God’s got it. I don’t have to worry about it. That gives me the energy to do what I can. He takes care of the rest.

  7. Great post. Especially where you tell us not to worry too much!

  8. Angie:

    12%…that’s staggering. With statistics like these, we need special wisdom for living in uncertain times. Backup plans for our backup plans can even fail, so we must look beyond what this world has to offer. So thankful for God’s help and peace in times like these.

  9. I saw an article a few months ago on CNN.com about bulletproofing your job. Newsflash– there is no bulletproofing your job. The days of job security are over . . . nobody is immune (Layoffs and Unemployment are Up: 7 Things You Should Do ASAP). No job is forever– even government employees are getting pink slips.

    That said, what can you do? (Notice I said, “YOU”)

    Start an emergency fund (See my post, Squirrel Accounts . . . Do Yourself a Favor and Set One Up)

    Carefully build your pantry and freezer stock (See my post, Our Frozen Assets)

    Cut non-essential expenses

    Start a sideline business(es) that could grow to a full time gig

    Develop additional professional or trade skills (Think About Learning
    Another Skill or Trade and Never, Ever Stop Learning . . . )

    Payoff or plan to payoff your cars and credit cards

    Become more self-sufficient (See my post, What Happened to Self-Sufficiency?)

    Bottomline: “Bulletproofing” is really about controlling your own destiny and keeping flexibility . . . (6 Defensive Moves You Can Make While the Sun Shines Upon You and Is Your Financial House in Order?)

  10. It looks like Michigan has 12.6%, crazy! My parents live there and my dad had to take early retirement from Ford. It is just a sad situation. Great tips, Lynnae!

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