Layoff Fears Rise: Preparing Your Finances Amidst Economic Uncertainty

For some U.S. Workers, the fear of layoffs is becoming increasingly real. January 2026 saw 108,000 job cuts announced in the U.S., marking the highest January total since 2009, at the complete of the Great Recession [Forbes]. This follows a trend of rising layoffs, with approximately 1.1 million job cuts announced in 2025, a figure not seen since 2020 [Fortune]. With roughly 72% of Americans rating the U.S. Economy as “fair” or “poor” [Fortune], proactive financial preparation is crucial.

Preparing for Potential Job Loss

If you’re concerned about potential layoffs, taking steps to secure your financial position can provide a buffer against the shock of lost income. Here’s how to prepare:

Make an Emergency Budget

Creating a budget is essential even with stable employment, but it becomes even more critical when facing potential job loss. Financial planners recommend developing both a standard budget and a bare-bones “emergency budget” to implement if you lose your income [CNBC]. This involves identifying essential versus non-essential spending and understanding how to adjust your lifestyle accordingly.

“It shows them how to do things when they’re not panicking,” says Melissa Cox, a Certified Financial Planner and founder of Future-Focused Wealth [CNBC]. It’s also important to manage emotional spending, which can increase during times of stress.

Budgeting apps can help track spending and maintain consistency. Options include:

• Monarch: Costs $8.33/month (billed annually) or $14.99/month. Offers a net worth tracker, investment portfolio tracking, and goal creation [CNBC].
• PocketGuard: Offers a free basic plan and a premium subscription for $12.99/month or $74.99/year. Features an “In My Pocket” tool to determine available spending money [CNBC].

Start Saving, Even Small Amounts

Building an emergency fund is a vital step in preparing for job loss. Even small, consistent savings can make a significant difference. “Make a priority of saving $50 a week, $25 a week, whatever it might be,” advises Cox [CNBC]. Automating deposits can help ensure consistent saving.

Consider a high-yield savings account to maximize returns while maintaining accessibility. Options include:

• Marcus by Goldman Sachs® High-Yield Online Savings Account: Offers a competitive APY with no minimum balance or monthly fees [CNBC].
• CIT Bank Platinum Savings Account: Provides a high APY on balances of $5,000 or more, with no monthly fees [CNBC].

Negotiate Severance and Plan Its Use

If severance packages are common in your industry, don’t automatically accept the first offer. Negotiating your package is possible, potentially including severance pay, unused time off payouts, and 401(k) vesting [CNBC]. You may also be able to negotiate healthcare coverage extensions.

Once you have a severance package, use it wisely. Cox recommends saving as much of it as possible to create a financial cushion. Consider consulting a tax professional to explore options for minimizing taxes on severance pay, such as contributing to a traditional IRA [CNBC].

Avoid Damaging Financial Strategies

While it can be tempting to rely on credit cards or tap into retirement accounts during a layoff, these should be last resorts. Credit card interest rates are high, averaging 22.3% as of November 2025 [Federal Reserve], and raiding retirement funds can result in taxes and reduce your long-term security.

Financial Resources After a Layoff

• File for Unemployment Benefits: This should be one of your first steps.
• Secure Health Insurance: Arrange for continued coverage if it was part of your employment package.
• Assess Your Finances: Evaluate your severance, savings, and current spending to determine your financial needs.

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