Just as you were savoring the sweetness of a promotion, your work ethic was at its peak. However, without warning, the layoff storm struck, shattering all the plans you had made. Managing your finances after being laid off is a real challenge that lies ahead. Losing your job means losing your primary source of income.

However, this does not mean that life must come to a halt. Life will continue, and daily expenses must still be covered. Therefore, you must be able to manage your finances after being laid off.

It is important to remember that managing finances after being laid off is not just about surviving, but also about how to optimize the use of available resources. Here are some simple ways to manage your finances that you can try after being laid off.

1. Conduct a Comprehensive Financial Assessment

The first step in managing your finances after being laid off is to conduct a detailed financial assessment. Record all your assets, from savings, investments, to other liquid assets. Don't forget to also record all your liabilities, such as installments, monthly bills, and outstanding debts.

By understanding your financial condition comprehensively, you can prioritize your expenses. For example, prioritize essential needs such as food, housing, and electricity, while postponing discretionary spending.

Managing your finances after being laid off requires honesty with yourself about your actual financial condition to ensure more accurate next steps. Additionally, this evaluation helps you identify opportunities for savings.

You may be able to reduce subscription costs for paid entertainment, use public transportation, or cook at home to cut down on food expenses.

2. Develop an Emergency Budget and Curb Expenses

Managing your finances after a layoff means creating a realistic emergency budget. Use a simple formula, which separates your funds into three categories: basic needs, liabilities, and a reserve fund. Make sure the reserve fund can last at least the next three to six months.

Reduce all non-urgent expenses. If you are used to eating out or shopping for non-essential items, now is the time to refrain. Focus on expenses that are really important so that savings do not run out quickly. Managing finances after a layoff requires discipline to avoid impulsive spending.

3. Utilize Severance Pay

It is very important to utilize the severance pay that you get after being laid off. Use these funds wisely to cover basic needs, pay urgent obligations, or as capital to start a small business. Avoid spending the severance pay on consumptive things, such as luxury vacations or buying non-urgent items.

Separate the severance pay into several posts: living expenses, emergency fund, and investment. That way, the funds can provide long-term benefits and not just run out in a short time.

If possible, allocate a small portion of the severance pay to improve your skills or attend job training. This step can increase your chances of getting a new job or opening a business opportunity.

Also Read: 5 Ways to Manage Sandwich Generation Finances Without Sacrificing the Future – Treasury

4. Find Additional Sources of Income

Relying on savings alone is not enough. After being laid off, immediately look for opportunities to earn additional income. You can utilize your skills, such as writing, graphic design, cooking, or teaching.

In addition, consider selling items that are no longer used but are still feasible. Online buying and selling platforms can be a quick medium to get extra funds.

This step may feel hard at first, but alternative sources of income can be your financial savior, at least until you get a permanent job again.

5. Avoid Consumptive Debt

The last way to manage finances after being laid off is to avoid getting into debt. In the midst of uncertain financial conditions, getting into debt for consumptive needs is a dangerous trap. Debt with high interest rates, such as credit cards or online loans, can burden your finances and worsen the situation.

If you are forced to go into debt, make sure the purpose is clear and for something productive, such as small business capital or education. Also, make sure you have a realistic repayment plan.

Facing layoffs is not easy, especially if it comes suddenly. However, with the right steps, you can still maintain financial stability and continue your life without being trapped in protracted financial stress.

Use every resource you have optimally. Believe that big changes in life can be a turning point to build a financially stronger future.