Seven Steps to Protect Your Finances After Being Laid Off

Being laid off can be incredibly stressful, embarrassing, and even isolating. But if you’ve ever been through a layoff, you’re certainly not alone: As many as 40% of U.S. workers have been laid off at least once.

What do all these people have in common? After a layoff, many feel too paralyzed and overwhelmed to keep their finances on track. Some even respond by making impulsive and harmful decisions, like cashing out a 401(k).

It’s certainly understandable to make money missteps during such a time. After all, there’s a lot that needs to be taken care of, and it’s tough to do your best thinking under this kind of stress. However, it’s possible to keep your finances and credit intact between jobs.

If you’ve been laid off, you can follow this seven-step checklist to manage your finances until you find your next role!

Seven-step financial checklist for layoffs

If you’ve recently been laid off, you’re probably in a tailspin. Not sure where to start when it comes to managing the financial impact? You can follow these steps to help you stay organized and manage your money.

1. Request documents

If It’s important to act quickly, especially if your employer plans to continue downsizing. If you don’t reach out right away, you might have trouble contacting the right person to request your unemployment documents. 

The documents you need can vary by state, but they might include a layoff letter, which will have information about your termination, your remaining benefits and resources. You might also need separation paperwork.

Make sure you have a copy of the employee handbook as well. This is where you’ll find the employer’s policies on things like unused vacation days, sick days and PTO. You can use this information to make sure your final paycheck correctly reflects your accruals.

2. Use your remaining benefits

Depending on the circumstances of your layoff, you may have continued benefits for as much as 60 days or more.

For example, you might get subsidized COBRA coverage, meaning your ex-employer will cover the cost to maintain your healthcare plan for several months. That benefit alone could save you anywhere from $400 to $900 a month.

If you do have benefits after your layoff date, make sure to check the termination dates and use them before they expire. A few important moves to make:

• Schedule any outstanding medical, dental or vision procedures and annual exams ASAP.
• Get prescriptions filled and consider requesting a larger supply to last until you have your next insurance plan.
• Order new medical supplies or devices you may need soon, including glasses and/or contacts.
• Schedule appointments with any other covered professionals, such as therapists, financial counselors or advisors.

Check to see if you have a balance in your flexible spending account (FSA) as well. If you do, you can use it to cover medical expenses through the end of the calendar year.

3. Apply for assistance ASAP

To shorten the amount of time where you have no money coming in, apply for unemployment right away.

In early 2025, some states’ unemployment offices were downsized, so it could now take as long as 21 days or more to have your application processed. Once approved, most states will offer you unemployment for up to 26 weeks.

Key Benefit Timeframes After Layoff

Benefit	Timeframe
Unemployment	Up to 18 months to enroll*
COBRA	60 days to enroll
Insurance marketplace	60 days to enroll
Commuter card	90 days to use
FSA	Use by end of calendar year

*Timeframes vary by state

Depending on your situation and the rules in your state, you may also qualify for the following:

• Supplemental Nutrition Assistance Program (SNAP) (formerly known as food stamps)
• Marketplace healthcare or Medicaid

To find other support and services in your area, try using 211.org to see what’s available.

4. Re-prioritize spending

When dealing with reduced income after a layoff, every dollar counts. So, it’s crucial to be strategic about your spending. Many people get impulsive about where their money goes, and they use their limited cash to cover costs that should be low priority. For example, you might be tempted to pay off an old collection debt or pay your mortgage several months in advance. While these might seem like responsible choices, they can quickly deplete your emergency funds.

Instead of being impulsive, create a plan that helps you prioritize your expenses and determine how much money you need to cover them each month.

We recommend setting your priorities in this order:

1. Necessities: The most important monthly costs to cover are your rent or mortgage, food, utilities, medical needs and in some cases, transportation.
2. Secured debt: After covering necessities, prioritize maintaining payments on secured debt, or debt where you could lose your much-needed property if you miss a payment. For example, your car loan.
3. Other essentials: If you still have money available, consider holding onto it for upcoming, one-off necessities like quarterly insurance premiums or vehicle registration.
4. Unsecured debt: Finally, try to cover at least the minimum payments due on your unsecured debt, including credit cards, personal loans and student loans. By doing so you’ll avoid damaging your credit. But remember, if you need the money for something more important, you can always rebuild your credit down the road!

5. Contact creditors and billing companies

There’s a lot of help available for people facing financial hardships. But you must ask in order to get it.

If money is tight, give yourself some breathing room by asking your billing companies, lenders and credit card companies if they have hardship programs or other forms of support. In most cases, you’ll get more help if you reach out before missing a payment.

Here are a few places to start:

• Student loans: Inform your lender of your situation right away. For federal loans, contact your loan servicer and see if you can apply for an income-driven repayment plan (IDR), which could lower your payment to as little as $0.
• Phone/internet: Apply for Lifeline to get up to $9.25 off your monthly bill.
• Other utilities: See if your state offers LIHEAP or WAP to help you pay for heating or cooling.

6. Cancel automatic payments

The average U.S. adult spends around $90 a month for subscription services—many of which go unused.

To cut down on the unwanted, recurring charges that can wreck your budget, be proactive. Take some time to look through your last few months of financial statements — that includes credit cards and bank account statements — to look for and cancel recurring fees.

Even if you find a service you still use, consider cancelling it temporarily until you get back on your feet.

7. Roll over your retirement account

This last step isn’t necessarily as urgent as the others, but it’s still important.

After you’re laid off, you may have the option to keep your retirement savings in the account your former employer opened for you. But there are several good reasons to consider moving the money:

• The account fees may increase or may be higher than what you would pay elsewhere.
• You might forget about the money or forget how to log in to your account.
• You can’t contribute any more money to the account.

In most cases, the best option is to either roll the funds directly into your next employer-sponsored retirement plan or an IRA when you’re ready, since you won’t face any tax penalties when you choose one of these options.

However, if the money is paid out to you directly, you’ll probably need to choose one of these options within 60 days to avoid steep penalties, which can include a 20% withholding for taxes and a 10% early-withdrawal penalty.

Landing on your feet after a layoff

Losing a job can shake up your world, but it doesn’t have to ruin your finances. By taking specific steps, like cutting expenses and asking creditors for help, you can avoid long-term setbacks. The key is to act quickly but be strategic. When you do, you’ll have a much better chance of weathering the storm.

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