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5 Ways I Plan for Financial Emergencies in Case I Get Laid Off Again


  • When I was laid off from my full-time job in 2015, I had no plan for the sudden loss of income.
  • Since then, I’ve become savvier with money and make active moves to protect myself from sudden loss.
  • Now I have an emergency fund, a set budget, and multiple streams of active and passive income.
  • Read more from Personal Finance Insider.

When I got laid off from my full-time job in 2015, I panicked. I had relied on the income from that job to pay my bills, and when I was let go without any advance notice or warning, I didn’t have any plan to replace the money I was making from that job.

Ultimately, I decided to become my own boss. I also resolved to become more financially savvy so I would never find myself in a situation where all of my income was erased in just a few minutes, which is what it felt like when my boss told me I no longer had a job.

Here are the five ways I plan my finances so that I can always be prepared for another sudden loss of income.

1. I stick to a strict budget

Creating a budget was the first thing I did when I got laid off. It was important to track my spending to reach financial goals, and the only way I could do that was by carefully constructing rules and boundaries for how I used my money.

While it took me a few years to be firm about sticking to a budget, it’s allowed me to be smarter about how I spend my money and how much of it I save. That way, if a financial emergency happens, I can feel more in control of my personal cash flow and make any needed adjustments. 

2. I created an emergency fund for myself

Before I got laid off, I didn’t have any emergency funds — let alone a robust savings account that I made an effort to contribute to monthly. I quickly realized how much I needed one when I got laid off from my job and had bills to pay with no clear strategy as to how to make up for the income I just lost. 

I decided that as I built my career as an entrepreneur, I would build my emergency fund by putting money into that savings account every month. 

Experts say that a person should generally have three to six months of expenses in an emergency fund. I always aim to have six months or more saved in my account since my income and projects as an entrepreneur can fluctuate.

3. I have multiple streams of income

When I was working full-time at a startup, I only had time to work that job. So, the total amount of money I could make was my salary. Now that I work for myself, I have made it a point to find a variety of ways to bring in alternative streams of income. That way, if one of the ways I make money is on hold or it ends, I still have revenue coming in from other projects.

For example, in addition to my business, I offer consulting and coaching, do freelance writing, and have a few side hustles that all bring in various amounts of income every month. Whenever one stream of income goes away, I spend that time figuring out something to replace it with.

4. I’ve built several streams of passive income

After getting laid off, I had a friend tell me about the different passive streams of income he was making. That sparked my attention and I began my own adventure of finding ways to make passive income every month. 

I have between five and seven passive streams of income that vary from online courses, to e-books, to investing in small businesses, to keeping my cash in a high-yield savings account

A benefit of passive income is the small-to-nonexistent amount of work you need to do in order to maintain cash flow. Because there are so many ways to make passive income, researching and starting with one stream that you’re comfortable with can be a nice way to begin building financial security. 

5. I’ve reduced my debt

While I had minimal debt at the time I was laid off, it was still a headache to have to worry about any debt while also trying to build my income and find new work. Because of that, I want to try to limit my debt as much as possible so that if another financial emergency happens, I can focus on immediate expenses that I must pay for.

To do this, I’ve had to alter my credit card spending habits so that I am only charging items that I know I have the money to pay off by the end of the month. I also try to plan big purchases in advance so that I can save for them instead of taking out a personal loan to afford those items.

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