Are You Prepared for a Layoff? Here's How to Know

Given that the U.S. labor market is in pretty decent shape, you might assume that a layoff isn't something you really have to worry about much these days. But in a recent Monster report, 26% of respondents said their companies were directly affected by layoffs in the past year. That's not exactly a small percentage. 

Getting laid off can constitute an emotional blow as well as a financial one. And while you may not exactly be able to prepare for the former, you can take steps to prepare for the latter. If you're not sure you're set up to withstand a layoff, ask yourself these key questions.

1. Can my savings cover three months of essential bills?

You may have some money in your savings account to cover emergency expenses or a period of unemployment. But do you have enough cash reserves to pay for three full months of essential expenses? If not, then you may want to make it a priority to boost your emergency fund now, while you're still employed.

The reason it's important to have three months' worth of savings is that for many skilled roles, it takes time to submit applications, go through what could be a series of interviews, and get through the red tape of receiving a job offer. So you want to make sure you can pay your bills during that time and avoid debt.

Now, you may be thinking, "But won't I get severance and unemployment if I'm laid off?" And the answer is, it depends. 

You may not be eligible for severance depending on your company's policy, your industry, or the length of your employment stint. And even if you qualify for unemployment benefits, those might only replace a small portion of your missing paycheck. So it's really important to aim for enough savings to cover three months of bills.

2. Are my skills up to date?

Maybe you've been coasting at work but are well aware that building certain skills will serve you well. Or maybe you were up on certain skills in the past but have let them lapse as your specific daily tasks took a different direction.

Think about the core requirements of your role and make sure your skills are such that you'd be able to perform well in another workplace environment. If not, prioritize the skills you need to build or brush up on, and then make an effort to get up to speed. 

3. Are my online profiles and resume current?

If you get laid off, you may want to dive right into the job application process -- for the sake of your personal finances and mental health. And that may be possible if you update your resume and online profiles now.

Take a look at your current resume, remove tasks and experiences that no longer apply or are relevant, and update that document to reflect the work you've been doing most recently. Make sure to highlight any awards you've received or new skills you've developed.

Similarly, you might have a profile on LinkedIn or industry-specific sites. Make sure those profiles are updated so you can immediately begin a job search should you need to. Also, if you want to ask people for endorsements, do it now. If you wait, you might catch certain contacts during a busy time, thereby delaying that process. 

Getting laid off isn't an easy thing to cope with -- financially or otherwise. But if you take these steps to prepare, it might make the process much easier.