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More than 67,000 tech employees have been laid off from their jobs so far this year.
If you’ve been laid off, look closely at your last three months of spending to understand where to cut back.
Then, divide your severance by six months to give yourself enough breathing room to find a new job.
In the tech sector alone, 67,000 workers have been laid off from their jobs in 2022. And more layoffs in many fields could be coming if we end up in a recession.
If you just got laid off from your job, or if you’re worried about layoffs down the line, former financial advisor Humphrey Yang, who now shares relatable personal finance tips with his 3.3 million TikTok followers, has some advice.
First, understand exactly how much you’re spending every month
Yang says auditing your monthly spending is the first step.
“You really want to look at what you’ve been spending for the past three months and get an average; then you can figure out where you can cut back in certain areas going forward, especially if you don’t know if you’re going to have stable income or not.”
Inevitably, your spending habits will have to change when you don’t have stable income, says Yang. Getting clarity on how you’re spending your money, what you’re willing to give up, and what areas need to be trimmed from your budget moving forward sets the foundation for your next steps.
Understand how long your severance package will last
A severance package is pay or benefits that an employee is given after being laid off from their job.
For example, when Meta laid off 11,000 employees this past week, the company promised 16 weeks of pay, plus six months of health insurance coverage, according to a letter from CEO Mark Zuckerberg to his employees.
When doing the math of how long your severance package will last, Yang recommends estimating that it will take you at least six months to find a new job, just to be on the safe side.
“Ideally you get a job before six months, but pretend that you’re going to be unemployed for anywhere between six to 12 months and model out those scenarios,” he says.
Using the Meta scenario, an employee may receive $5,000 a month, for example, for the four months of severance pay Zuckerberg promised in his letter. Yang recommends dividing the total $20,000 severance package by six months, which means you have roughly $3,333 per month to spend until you find your next job.
From there, look back at your monthly average spend (from step one) and see where your spending and expenses can be trimmed to meet your temporary budget.