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There are a lot of guides out there about how to handle a layoff. Most of them are excellent. They'll walk you through severance, unemployment, COBRA, job boards, and what to do if HR starts acting sketchy.

 

You should read those. Truly.

 

This guide skips all of that.

 

When I was laid off, I couldn't find a step-by-step guide for how to rebalance our budget — something to help us get through the next few months, not just the next job interview.

 

 

Hi. If you've just been laid off and you're staring at your bank account wondering how you're going to make this work — don't worry. Start here.

 

 

When I got laid off, we went from two incomes to one overnight. I had a decent severance package, an emergency fund, and a spouse with a stable job — and it was still way tighter than we expected.

 

We weren't just paying for rent and groceries. We had daycare. Insurance. The mortgage on a home we loved. A nanny who made our lives possible. A bunch of little luxuries that had crept in during better times.

 

Suddenly, every expense had a question mark next to it.

 

We did the math. We made some hard calls. We tapped our emergency fund. And we got through it — not because we knew how long it would last, but because we made a plan that flexed with us.

 

This guide might not match your situation exactly — one of the things about personal finance is that it's so personal — but I've tried to organize it in a way that lets you build a version that works for you, whether you've got a partner or you're solo, whether you're sitting on savings or already behind on bills.

Before you touch a spreadsheet, you need to get clear on your priorities.

 

 

When I was laid off, we had three priorities...

 

- Staying in our home (locked-in mortgage, great neighborhood)

- Keeping our twins in daycare (structure + sanity)

- Keeping our nanny (so I could job hunt and breathe)

 

Everything else was theoretically on the table.

 

Your priorities might look totally different — and that's fine. You might want to keep your car. Or stay close to your kid's school. Or preserve your weekly therapy appointment. Or just make sure you can still afford dog food and Wi-Fi. There's really no wrong answer here.

 

Not sure what your priorities are? Here are some questions that can help you sort things out.

 

- What's essential to my well-being or my family's stability right now?

- What expenses give me the most peace, freedom, or structure?

- What are the things I dread giving up — and which could I let go of tomorrow and not miss?

 

Once you've thought it through, write down your top two or three priorities. Knowing what you want to protect will help guide the decisions that come next — what to cut, what to keep, and how to build a plan that feels like it's protecting your life, not just your money.

Now that you know your priorities, it's time to run the numbers. This step is all about clarity. You're trying to answer one question:

 

 

Start by making a physical list (either on paper or digital) of every income source you still have — even if it's temporary or partial. For now, we're only looking at money that's coming in on a regular basis. Actually write it all out, along with how much you expect to receive each month. Here's a list of some potential income sources:

 

- Severance pay

- Unemployment benefits

- Partner's income

- Freelance or side gigs

- Rental income

- Passive income (dividends, royalties, etc.)

- DO NOT include emergency savings just yet (more on that in a moment)

 

It's okay if some of these income sources are short term (severance) — just make a note. We'll use that info soon when you build your new budget. Once you have your list, add up how much you'll expect to still bring in each month.

 

Next, it's time to list your essential expenses — the costs that keep your life stable. Again, actually list these out, along with how much it costs per month. (If you're not sure, use your average from the past three months.) Use this list as a starting point, and add anything else that applies to you:

 

- Rent or mortgage

- Utilities (gas, water, electricity, internet, phone)

- Groceries and household supplies

- Health insurance + ongoing medical costs

- Childcare or school tuition

- Transportation (gas, public transit, car insurance, maintenance)

- Minimum debt payments (credit cards, student loans, car notes)

- Pet care (food, meds, vet visits)

- Taxes (especially for freelancers or self-employed folks)

 

If something from your Step 1 priorities isn't on this list, add it now. For example:

 

- A standing therapy appointment that helps you stay grounded

- A car lease that's your only way to get to job interviews

- A storage unit while you transition housing

 

Pull up your last two or three months of bank and credit card statements while you do this. It's the best way to catch recurring expenses or forgotten charges that don't immediately come to mind. Don't judge yourself here. Just be honest. Like before, once you have your list, total it up. This gives you a rough idea of your monthly minimum required spend.

 

Now subtract expenses from income. Maybe do a little drumroll to release some tension.

 

There are three possible outcomes:

 

Surplus: Your income covers essentials → Amazing.

Break-even: You're close to even → Proceed with caution, but good.

Shortfall: Expenses are greater than income → Now we look at savings.

 

If you're dealing with a surplus... Great news — that gives you flexibility. But instead of slipping back into old habits, put that surplus to work. You can use it to extend your runway by setting aside $100 or $200 a month to cushion the blow if something else unexpected happens (like a medical bill or car repair). You could also pick a few intentional, low-cost comforts (like a streaming service, gym membership, occasional babysitter, Spotify premium, etc.). Just be sure to keep it tight. Your goal right now is staying nimble, not spending freely.

 

If you're just breaking even... That's a stable starting point, but keep a close eye on your spending. Small shifts (like a higher utility bill or surprise medical copay) could put you underwater quickly. If you have money in savings, think of it as your buffer — not your backup plan. You might not need to tap it yet, but having it ready gives you options. Set a checkpoint now for when you'd consider using it. For example, "If I dip below $500 in checking," or "If I have to carry a credit card balance next month." That way, you won't wait too long or spend it too fast.

 

And if you're looking at a shortfall... Don't panic. You're not out of options — you just need a different plan. The next steps in this guide will help you stretch what you have, reduce the gap, and explore new ways to bring in support or income. You're not stuck — you just need to pivot.

Emergency savings is probably the first thing that comes to mind when you lose a paycheck. And yes — this is what it's for.

 

But that doesn't mean you should empty it all on day one.

 

The smartest way to use your emergency fund is to fill the gap between your income and essential expenses — not to keep your old lifestyle going or to delay making hard decisions. The goal is to stretch it as far as you can while keeping your life stable.

 

Here's how to figure out how long your savings can support you:

 

Example: Expenses = $3,000, Income = $1,800 → Gap = $1,200

 

Example: $6,000 ÷ $1,200 = 5 months of runway

 

That's how long you can float your current budget — without adding more income or making deeper cuts.

 

If your emergency fund feels small (or nonexistent), you're not alone. Nearly 40% of Americans couldn't cover a $400 emergency without borrowing. Don't let that stop you — the rest of this guide is built to help you work with what you do have.

 

If you're fortunate enough to have a solid emergency cushion, be strategic. You don't have to spend it all at once. Use just enough to cover the gap — and let the rest buy you more time, flexibility, and peace of mind.

If your emergency savings gives you three months of runway, what happens in month four? Or what if you've just crunched the numbers, and it turns out you have no runway at all?

 

That's where your backup plan comes in.

 

Think of it as your safety net's safety net — the set of moves you'd be willing to make if your job search stretches out longer than expected.

 

Here are some options to consider:

 

- Start applying for part-time or out-of-industry work

- Move in with family or take in a roommate

- Pause or reduce paid childcare

- Downsize housing or move to a more affordable area

- Sell a vehicle you're not using

 

Try setting a checkpoint for when you'd pivot to Plan B:

 

"If I'm not employed by the end of month 3, I'll start looking for part-time work."

"If my savings drop below $1,000, I'll move forward with subletting my apartment."

 

You might not even get to that point. But mapping it out now means you won't be scrambling later.

Let's be honest, a lot of the things people call "nonessentials" are the very things that make day-to-day life work.

 

The streaming services that helped you decompress.

The gym that gave you structure.

The meal kit that saved you at dinnertime.

The housekeeper who kept things livable while you worked.

 

Losing those perks can sting more than you expect. The good news? You're not helpless.

 

This isn't about going without. It's about finding low-cost, lower-stress alternatives to get you through the lean season.

 

Instead of this... Try this...

Bi-weekly manicures DIY nails (YouTube is your friend)

$90/month gym Free YouTube workouts or neighborhood runs

Grocery delivery In-store shopping (with a list!)

Takeout twice a week Batch cook and freeze favorite meals

Multiple streaming services Rotate one per month

Housekeeping/lawn care DIY with a loose cleaning schedule

 

None of this is permanent. But every swap you make now extends your financial runway — and keeps you from raiding your emergency fund too early.

 

Plus, if your schedule is suddenly wide open, you may be able to reclaim some of the things you used to outsource.

 

- Clean your own space

- Walk your own dog

- Cook more meals at home

- Share childcare hours with a partner or friend

- Fix the broken drawer you've been ignoring (or at least Google how to)

 

These changes won't fix everything. But even one or two can help things feel normal.

 

Lastly, if you're feeling aimless, create a light routine that balances job searching, responsibilities, and recovery. Here's an example of what your day could look like:

 

Morning: Job applications or networking

Afternoon: Errands, chores, or a walk

Evening: Free fun, rest, or regrouping

 

A little structure goes a long way toward making this season feel like a plan — not a spiral.

 

Important reminder: If you're dealing with burnout, caregiving, illness, or just the sheer stress of survival — do what you can, and let that be enough. This isn't about optimizing every hour of your life. It's about giving yourself options.

If you're facing a shortfall, don't try to power through it alone.

 

A lot of people don't ask for help because they think they haven't "earned it." But most of these programs exist specifically for moments like this. You don't need to hit rock bottom. You just need to apply.

 

Here are some of the most useful (and often overlooked) options:

 

Yes, they vary wildly. Yes, they're usually taxable. Still — they can be a critical bridge. Apply as soon as you can. It may take a few weeks to kick in.

 

If you lost employer coverage, you've got options:

 

- COBRA: Usually the same plan, but expensive

- ACA Marketplace plans: You may qualify for big subsidies

- Medicaid: Free or low-cost, depending on your income

- CHIP: For kids in low- to middle-income households

 

Start with Healthcare.gov — it'll walk you through next steps based on your zip code.

 

Even temporary help here can free up hundreds per month:

 

- SNAP (aka food stamps): Based on income and household size

- WIC: For pregnant people and children under 5

- Local food banks: No income verification needed — just show up

 

These programs are rarely advertised — but they exist.

 

- Ask your utility providers if they offer hardship or payment plans

- Many credit card, auto loan, and mortgage servicers do too

- Some banks may waive overdrafts or late fees if you ask

 

- Check if your daycare offers a sliding scale

- Look for state subsidies for childcare or preschool

- Join a local Buy Nothing group or parenting swap — you'd be amazed what's available for free

 

- Many cities and counties offer emergency rent or utility aid

- Look for local nonprofit legal clinics if you're facing eviction

- Some housing authorities have waitlists for reduced rent or short-term assistance

 

Do an online search for...

 

- [your state] + financial assistance

- [your city] + rent help / unemployment resources / emergency aid

 

You're not taking away from someone else. You're stabilizing your life. That's what these programs are for.

Rebalancing your finances after a layoff can feel like trying to build a raft while the boat's already sinking. It's scary. It's exhausting. And it's easy to feel like you're failing just because you're in this position in the first place.

 

But you're not.

 

You're asking the right questions. You're making a plan. You're doing what this moment demands — and that's what resilience actually looks like.

 

Over the course of my unemployment, we ate through more than half of our emergency fund. We cut back. We adjusted. We held onto what mattered most. And we got through it. We've even managed to rebuild to where we were when we started.

 

You will too.

 

Whether you're starting with savings or nothing, solo or partnered, confident or panicking — this guide was built to give you clarity, structure, and a little momentum. The rest will follow.

 

Keep going.