Preparing Your Finances Ahead of 2025 Layoffs: A Practical Guide
Today, job security is not as permanent as it was before. In 2025, many companies are doing layoffs to reduce their expenses, and this is not limited to just one sector. It is increasing in every industry. Therefore, it is very important to take your financial planning seriously from today itself.
When the job is lost, the financial pressure and stress become very high. Rent, bills, loan, EMIs, managing all this becomes very difficult. If one is not prepared beforehand, people fall into depression. But if you make your finances strong, then you can handle this situation more easily.
Major Problems Caused by Layoffs:
- Loss of Regular Income: When salary stops, it becomes tough to manage rent, bills and daily expenses.
- Loan and EMI pressure: It becomes difficult to pay home loan, personal loan or credit card EMI on time.
- Mental Stress and Anxiety: As soon as the job ends, tension, self-doubt and anxiety start increasing.
- Lifestyle disruption: Things that were previously affordable, like outings, shopping, travel have to be stopped suddenly.
- Loss of Health Insurance: The health cover given by the company also goes away, and if there is no personal policy, the risk increases.
- Emergency fund runs out quickly: If savings are limited, money runs out in a few months.
- Pressure of finding a new job: Updating resumes, giving interviews and facing competition can be mentally draining.
- Family is also affected: Financial stress affects not just you, but the whole family, especially kids and spouse.
Here’re some of the best steps to take for financial preparedness to buffer a layoff.
1. Understand Your Financial Situation
When you are preparing your finances for layoffs, the first thing to do is to understand your financial situation properly. Meaning, you should know how much you earn and how much you are spending, and how much debt you have.
Know your income: First of all, see how much money you get every month.
Note your expenses: Start writing down your expenses every month. Rent, food, electricity bill, mobile bill, travel, EMI of loans, and other expenses. This will tell where the money is going.
Understand your debt: If you have a loan or credit card bill, then write down its total amount and EMI. The lesser the debt, the lesser will be the financial pressure.
Check your savings: How much savings do you have? How much money do you have in the bank? Have you invested in any fixed deposit or mutual fund? Note all this.
Understand the flow of money: If your income is high and expenses are low, then you can save well. If expenses are high, then it is important to reduce them.
Tip: Keep analyzing your income and expenses every month, so that you know where you can reduce your expenses.
By doing this you will understand the complete flow of your money. Until you know your financial condition, financial planning will be difficult.
2. Build and Strengthen Your Emergency Fund
Emergency fund means savings that you keep only for emergencies. When you lose your job or have some unexpected expense like – medical emergency, car repair, or house repair then this fund comes to your aid.
Why is emergency fund important: At the time of job loss or financial crisis, you should have money immediately so that you can meet your expenses. Having an emergency fund reduces the need to take loans.
How much should the emergency fund be: Generally experts say that there should be at least 3 to 6 months of money equivalent to expenses in the emergency fund.
How to create an emergency fund?
- Look at your budget and set aside a little money every month for an emergency fund. Even if it is just Rs 1,000, regular savings are very important.
- Keep this money in a place where you can get money quickly, like a savings account or liquid mutual funds.
- Whenever you get extra income, put a part of it in the emergency fund.
How to keep the emergency fund strong?
- After withdrawing money from the emergency fund, try to replenish it quickly.
- Never use the fund for regular expenses or investments. It should be used only for emergencies.
- Keep updating your monthly expenses from time to time, so that the emergency fund also keeps growing accordingly.
The emergency fund is your financial safety net. When you strengthen this fund, you realize that you have backup money in difficult times, which saves you from financial tension.
Also Read: 5 Money mistakes we do
3. Reduce and Manage Debt
During layoffs, the most financial pressure occurs when you have a lot of debt. That is why it is important to reduce your debts. When your debt is less, it will be easier for you to manage your monthly expenses.
Some of the reasons why we should reduce the debt:
- Interest is charged on the loan, which increases with time and you have to pay more.
- Having a lot of debt, increases financial stress, and your problems increase during layoffs.
- By reducing debt, you can focus more on your savings and can also strengthen your emergency fund.
How to reduce your debt: Here are some points you can follow the below points to manage your debt.
1. Calculate all your debts: First of all, write down all your loans, credit card balances, personal loans, and monthly EMIs. This will let you know how much debt you have.
2. Focus on high-interest debts first: Try to eliminate the debt which has the highest interest (like credit card debt) first.
3. Try to make extra loan payments: If you have even a little extra money, try to make some extra payments apart from EMIs, so that the principal amount reduces quickly.
4. Do not take new loans unless necessary: There is financial uncertainty during layoffs, so avoid using new loans or credit cards unless absolutely necessary.
5. Look at debt consolidation options: If you have multiple loans, debt consolidation can be a good option. In which you can convert your multiple loans into a single loan, whose interest rate is low and repayment becomes easier.
6. Seek advice from a financial advisor: If you have a lot of debt and find it difficult to manage, it is a good idea to seek advice from a financial expert.
Keeping debt to a minimum makes your finances stress-free, and gives you financial flexibility during layoffs. Set your priorities, pay off extra loans, and avoid taking unnecessary loans. This will help you make your future financially secure.
4. Cut Unnecessary Expenses
When there is a chance of layoffs, the first thing that is important is to control your expenses. A large part of the salary is spent on small unnecessary things, which we ourselves do not even know about. If you pay a little attention, you can reduce your expenses to a great extent without compromising your basic needs.
Keep an eye on Discretionary Spending: Discretionary spending means those expenses which are not necessary, such as: Eating out frequently, Multiple subscriptions of OTT platforms (Netflix, Amazon, etc.), Online shopping, Monthly salon/spa visits, branded items, gadgets, etc. Temporarily stopping or reducing such expenses is a smart move when income is at risk.
Make a monthly budget and follow it: Make a simple budget in which “necessary” and “non-necessary” expenses are written separately. Such as: Necessary: Rent, bills, ration, medicines Non-necessary: Eating out, entertainment, impulse shopping. After making a budget, make it a habit to follow it every month.
Check Subscriptions and Memberships: Many times we keep paying for such services which we do not even use. Such as: Gym membership which is not being done, 3-4 OTT subscriptions when one is enough, Auto-renewal apps or newsletters, It is better to cancel or pause all these when you want to save money.
Choose saving options: Cooking food at home is cheaper than ordering online. Instead of getting caught up in offers and discounts, buy only the things of necessity. Use public transport or carpool.
Stop impulse buying: Before buying anything suddenly, follow one rule: “Wait for 24 hours.” Often we realize that those things were not necessary. The less you spend unnecessarily, the more money you can keep in emergency fund or savings. With a little self-control and planning, you can manage your expenses.
5. Diversify Income Sources
When there is a risk of job loss or salary stoppage, then depending on only one income source can be risky. That is why it is important to have multiple income sources today. This gives you financial stability and mental peace.
Do not depend on only one source: Often people depend only on the income coming from their job. But if the job is lost, then the entire income stops and that is the biggest problem. If you have 1-2 extra income sources, then some money will keep coming to you.
Any small work that you can do in your free time along with your job: Freelancing (writing, graphic design, coding, marketing, etc.) Online tuitions or coaching, Blogging, YouTube, podcasting Making and selling handmade products Affiliate marketing or content creation.
Think of earning by using skills: Think what you are good at writing, Excel, social media, repairing, designing? You can earn online or offline by using these skills. You can use these platforms like: Fiverr, Upwork, Freelancer, UrbanClap (now Urban Company).
Think of passive income options: Passive income means income that comes without doing daily active work. Income from rent (if you have property), Dividend of stocks, Mutual fund investments (through SIP), Digital products (eBooks, courses, templates). Building passive income takes time, but it is very useful in the long term.
Convert your hobby into income: Any interest or hobby of yours like – painting, baking, photography, music. It can also be made a source of income. Today, you can reach your work to people through Instagram, WhatsApp, and online marketplaces.
A smart financial move is to develop small income sources along with your job. When you have multiple sources of income, you do not feel completely financially helpless even after losing a job.
6. Understand Your Benefits and Rights
After losing a job, not only the income stops, but many times people fall prey to confusion and fear “What will happen now?”, “Will anyone help?”, “Where will we get money now?” Therefore, it is very important to have clear knowledge about your employee benefits and legal rights even before job loss.
What is Severance Package: Which companies provide a severance package at the time of leaving a job or layoffs. This depends on the company’s policy, but generally it includes: Extra salary (like 1-3 months), Payment of unused leaves, Bonus or gratuity.
PF (Provident Fund) and Gratuity: If you work in a registered company, then PF is deducted from your salary. After leaving the job, you can withdraw or transfer your PF. If you have worked in a company for 5 years or more, then you can also be eligible for gratuity. You can check the status of PF from EPFO’s website or app.
ESIC / Health Insurance Benefits: If you are registered under ESIC (Employees’ State Insurance Corporation), you can get some health benefits after leaving the job. Some private companies also provide extended coverage of their health insurance.
Notice Period & Final Settlement: At the time of layoff or resignation, the company has to give you a notice period (usually 2-3 months), or its payment. You should get your salary dues, leave encashment, Full & Final settlement. All these things should be received on time.
Legal Rights: If you feel that you have been unfairly fired (without reason, without notice, or harassment), then you can take legal advice. You can file a complaint in the labour court. You can use the HR and grievance redressal system.
At the time of layoff, not just emotional, legal and financial clarity is also important. Be aware of your benefits and rights beforehand, whether it is taking severance, withdrawing PF, or raising voice against unfair treatment.
7. Plan for Health Insurance and Other Essentials
The biggest challenge after job loss is to manage medical emergencies or basic daily needs especially when there is no regular income. Therefore, it is very important to have a health insurance and basic essentials plan in advance.
Why is it important to continue health insurance: Often the company provides group health insurance along with the job, but as soon as you leave your job, that cover also stops. In such a situation, if you get sick or have an accident, you have to bear the cost of treatment yourself and hospital bills can be very high.
What should be done: Below are some points you should take care regarding the health insurance.
1. Get your personal health insurance : A basic plan will also do, but there should be coverage. If you already have insurance, pay its premium on time and do not let it lapse. Check the coverage of your family (spouse, children) as well. You can take a family floater plan.
2. Mediclaim & OPD Cover: The sooner you take it, the better it is. Taking insurance after the job can be a bit costly, especially if you have health issues. That’s why taking a plan at a young age or in a healthy condition is cheaper.
3. Make a list of essential expenses: During layoff, you have to plan your expenses according to priority. You will have to think which expenses are essential (like rent, ration, medicines, utility bills) and which are non-essential (eating out, shopping, travel, etc.). Make a monthly list, which contains only essentials. Make a budget according to that.
4. Keep a separate medical emergency fund: Apart from health insurance, keep a small fund separately only for medical emergencies. It is useful to keep 10-20 thousand rupees ready in cash or savings bank account.
5. Understand Government Schemes: If you do not have health insurance, then some government schemes provide temporary help like : Ayushman Bharat (for BPL families) or State-level free health schemes. Having basic knowledge about them can also be of great help.
8. Keep Skills and Resume Updated
The first thing that is required after a layoff is to find a new job. And in this process, your skills and resume make your first impression. If you have updated both these things on time, you will be one step ahead of the competition.
Keep upgrading your skills regularly: The job market is changing very fast. The skills that are important today may become outdated after 6 months. So, stay updated with the latest trends in your industry. Keep learning new skills through online courses (Coursera, Udemy, LinkedIn Learning)Get certifications that add value to your resume. Improve soft skills too like communication, time management, team coordination, etc.
Updating your resume is very important: Resume is your digital identity. Recruiters look at it first. So. add your latest job role, achievements and projects and keep the resume in a simple and clean format. Use keywords that match your job profile (this is helpful for ATS – Applicant Tracking Systems).
Update your LinkedIn profile: LinkedIn is a major platform for hiring these days. Your profile should be updated and active. Add a professional photo. Keep your Headline and “About” section crisp and clear. Add skills and endorsements. Post or share your work achievements if you are active on LinkedIn. Recruiters can also approach you directly.
Keep a Portfolio or Sample Work Ready (Where Applicable): If you are in a creative or technical field (like writing, designing, programming), then keep your portfolio ready. Save samples of your best work Sharing a link to Google Drive, Behance, GitHub, or your website is useful.
Learn to do Mock Interviews and Resume Reviews: Job interviews can come quite quickly after layoff. So, practice mock interviews (with friends or mentors)Get your resume reviewed by an expert or use free online tools.
If your resume and skills are updated, it won’t take you much time to find a job after losing a job. These things not only help in finding opportunities but also in maintaining confidence.
Golden Tip: Make sure to review your resume once every 3-6 months, whether you are looking for a job or not.
Wrap Up
Layoffs are not uncommon these days. Uncertainty is increasing in every industry — and the most important thing to do in this situation is to be prepared.
The sooner you focus on your finances, skills, and planning, the easier you will be able to face any tough times.
- Understanding your financial situation
- Creating an emergency fund
- Reducing debt, controlling unnecessary expenses
- Creating multiple income sources
- Keeping your resume and skills updated and
- being aware of your rights and benefits
All of these steps keep you financially secure during layoffs.
Remember: Planning doesn’t mean you’re thinking negatively. Planning means you’re taking a smart and responsible approach. So, that when the situation gets tough, you’re already standing strong.
