Plan ahead for ‘what-ifs’
Pete the Planner tells you how,
Eight years ago or so, millions of Americans were on high alert.
It felt like, at the drop of a hat, your job could disappear and before you knew it, you were a victim of the Great Recession. It was a terrifying time.
Based on unemployment rates and GDP growth, the economy has recovered. Some Americans’ personal economies have recovered too. But there still exists an underlying feeling of negative inevitability. Your tendency is to suppress these negative thoughts, but leaning into them is much more prudent, because bad days will come again. Your goal is to ensure the next round of ugliness doesn’t impact you as severely.
I’ve lost a wink or two of sleep over negative “what ifs.” You probably have, too.
“What ifs” generally go wrong because people tend to stop short of solving the hypothetical problem. Instead, they just wallow around in the sadness. Today I’m asking you to run through all the bad “what ifs” you generally try to avoid. Specifically: What happens if you lose your job?
It’s pretty easy to get your head around the idea of planning for the future when the future is bright. For instance, you don’t mind planning for retirement, planning to buy a home or even planning to pay for your child’s education. And that’s why those three goals are the first three most think about.
Unfortunately, it’s the events we hate thinking about that need the highest level of planning.
Depending on which study you’re willing to believe, people average between 10 and 15 different jobs throughout their career. There’s no way all of those jobs will always end on your terms. I’m no exception. I currently have a few gigs, including a radio show, which likely will end before I want them to end. In regards to a job’s shelf life, there are no surprises. If you’re surprised and unprepared, that’s on you.
It’s incredibly difficult to take a step back and prepare for job loss when you’re currently struggling to make ends meet. If you try, you may end up getting stuck in the negative aspects of the hypothetical and never get around to the solutions part. But that doesn’t mean you shouldn’t try.
Let’s shortcut the process right now. You just lost your job. Sorry. I had to let you go.
WHAT HAPPENS NEXT?
It would behoove you to determine how long you can survive financially without a paycheck. For some people, unemployment benefits can bridge the gap. For others, unemployment benefits either aren’t available or don’t even scratch the surface. Survival then depends on emergency funds, the ability to secure another job and/or a massive cost-cutting effort. You obviously have bills to pay, such as mortgage/ rent, utilities and a car payment. But, hopefully, you can reduce the amount of money you spend each month on discretionary items such as food, entertainment and other lifestyle choices.
While reducing your optional spending seems obvious, I’ve seen many a person who refused to do so. Part of contingency planning is not only identifying areas of your life in which you’ll need to reduce spending in the event of joblessness, but practicing those spending reductions now.
It’s worth your time to create a contingency plan, whether you ever lose your job or not.
There are some strange positive side effects of contingency planning. If you properly prepare for the eventuality of sudden job loss, then you can create a sudden job loss on your own terms. You can take a different job, you can switch to a job you might enjoy more and happens to pay less, or you may even be able to retire earlier. By re-evaluating your spending with job loss in mind, you’re able to set new rules, expectations and habits.
Making plans for the ugly parts of life isn’t fun, but it’s better than being surprised by moments that aren’t really surprising.
If you properly prepare for the eventuality of sudden job loss, then you can create a sudden job loss on your own terms.