4 Resources to Help You Feel Financially Prepared for Layoffs

For some U.S. workers, the fear of layoffs is looming.

In January, U.S. employers announced 108,435 layoffs, an 118% increase from the same period a year ago, according to outplacement firm Challenger, Gray & Christmas. It was also the highest amount for any January since 2009, the tail end of the Great Recession. A month later, nonfarm payrolls fell by 92,000, per the Bureau of Labor Statistics. It was the third time in five months that the economy lost jobs.

This comes as about 72% of Americans rate the U.S. economy as “fair” or “poor,” a January poll of over 8,500 U.S. adults by Pew Research found. 

If you’re worried about being laid off, preparing your finances in advance could put you in a better position to handle the sudden shock to your income.

“What I try to do with my clients before any of this actually happens is I have them create an emergency budget,” said Melissa Cox, a Certified Financial Planner and founder of Future-Focused Wealth, a wealth strategy firm based in Dallas, Texas. As her clients prepare a standard budget, they also create a bare-bones budget that would be implemented in the event of a job loss.

This often involves deciding which spending is essential and which can be slashed. “It shows them how to do things when they’re not panicking,” she said.

Keeping emotional spending in check is another crucial role of a budget. “The first thing that people will try to do is maintain their lifestyle or even spend a little bit more on emotional spending,” she said. “Spending sometimes fills that void that we have.”

While using a spreadsheet is a good way to start making a budget, it can fall short in helping you build consistency. Using a budgeting app, like Monarch or PocketGuard, can connect to your accounts to help you track your spending and keep an eye on your progress once you’ve made your budget.

CNBC Select’s favorite high-yield savings accounts are the Marcus by Goldman Sachs® High-Yield Online Savings Account and the CIT Bank Platinum Savings Account, both of which stand out for their high rates and lack of monthly maintenance fees.

Citing a strong performance record or a long tenure could give you some leverage, according to the University of Miami’s Toppel Career Center. You may be able to negotiate any severance pay and whether it’s paid in a lump sum or as a continuation of your salary, as well as payouts of unused time off and even 401(k) vesting. Since healthcare is often tied to your employment, you may be able to negotiate a coverage extension beyond what’s offered.

Once you negotiate your exit package, use your severance to the best of your ability. “If you are somebody that can go down to more of an emergency-type budget and save some of that money, it could very well set you up,” Cox said.

You should also consider the tax implications, Cox advised. “Working with somebody who does taxes can help you figure out how you can potentially shift some of that money into retirement accounts so you can reduce some of the taxes.”

Things like traditional IRAs can reduce your adjusted gross annual income, which could help you get into a lower tax bracket. Opening one is fairly simple — Charles Schwab is one of our top picks for its low fees and commission-free stock options. Betterment is a good choice for its automated IRAs, which let the robo-investors do the work for you.

“I’m not a fan of living on credit cards,” she said. As of November 2025, the most recent data available, the average annual percentage rate (APR) of all credit card accounts with assessed interest was 22.3%, according to the Board of Governors of the Federal Reserve System. Any balance carried from month to month would be charged this amount over the course of a year. Since this interest also compounds, credit cards are a relatively expensive way to borrow money.

While 0% APR credit cards do exist, they should be used with caution. After all, these low rates are typically only for an introductory period of less than 24 months. After that, any balance is charged the card’s regular APR.

But don’t rush to your retirement accounts if you’re laid off, either.

“I’m also not a huge fan of dipping into retirement plans and 401(k)s or IRAs because that would create taxable income,” she said. “And you’re not only increasing your taxes by doing so, but you’re also robbing your retirement.”

Your severance and emergency funds should be your first stops for covering expenses after a layoff.

At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Melissa Cox, a Certified Financial Planner at Future-Focused Wealth in Dallas, Texas.

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