Wealth Planning CI Brightworth Private Wealth

Hiring freezes: 5 steps to get your finances ready

While “Hiring Now” signs dot storefronts and highways across America, the job market may be starting to cool. The Federal Reserve’s decision to bring down inflation by raising interest rates has some projecting a slowing economy—and slower sales—leading to job losses.

Employers are beginning to rescind job offers and other companies have announced that layoffs are coming. And while it may take a few months for any slowdown to affect your company or industry, you should consider preparing—especially since the ease of securing a new job is not the same as it was even three months ago.

If you believe a job loss is possible, here are five steps to take now.

1. Restock your emergency savings

Many people built significant wealth over the past decade, as the stock market rose year after year. From 2019 through 2021, it could have been tempting to add more cash to the stock market for what felt like easy gains, vs. the meager interest rates that cash deposits were earning. But that’s not the purpose of cash savings—they are, in fact, the base of your financial foundation and should always be intact.

Make certain you have three to six months of cash saved to pay for essential expenses—mortgage and car payments, utilities, insurance, food, car repairs and maintenance, and out-of-pocket medical expenses.

2. Review expenses and pay down debt

Once your emergency fund is in place, review your budget to reduce as many fixed monthly expenses as possible. For example, if you aren’t watching Netflix and other streaming services as much now as during the Covid-19 outbreak, start there.

And while you could continue paying minimum amounts on credit card balances after a job loss, it’s better if you can lower or pay off that debt now, as that will free up more money in case of an emergency.

3. Strengthen your job network

Ask yourself: “If I need to begin looking for work, is my network strong enough to ask for an introduction or a job reference?” If working from home has weakened those ties over the past two years, it’s time to begin rebuilding them.

Professional recruiters are also great relationships to have. Find one who specializes in your industry or knows your local geography well. And finally, increase your social media presence on LinkedIn.

4. Find out how your severance package works

If your job is eliminated and you qualify for severance, the amount you receive can vary widely depending on your position and years of service.

For those receiving a lump-sum severance payment, it can feel like a windfall. But those dollars can quickly disappear without a plan. Consider these variables: How long could it take to get another similar paying job? Do I have enough to pay my mortgage and other debts for several months? Have I set aside enough for taxes? It can be wise not to invest your severance until you have secured a new job or know that you have enough to not have to go back to work.

5. Review stock options and other equity awards

For senior-level executives, company stock may be your most lucrative asset. Many executives have amassed thousands of stock options or shares of restricted stock. However, the stock market’s drop this year could mean the value of your company stock has declined sharply.

Consider how long you have left to exercise your stock options, and what stock awards you’ll forfeit. And remember that restricted stock may suddenly vest upon your exit from the company, which can mean a higher tax bill. And if you are overly concentrated in your company stock, when those shares vest and are released to you, consider diversifying into a liquid portfolio.

Now is the time to prepare for a changing job market. The trends with job openings, hiring bonuses and the Great Resignation may be in our rear-view mirror now. Look ahead and secure a bright personal and financial future.


ABOUT THE AUTHOR

Lisa Brown

Lisa Brown

Partner

Lisa is the Practice Area Leader for Corporate Executives at CI Brightworth and is the current chairwoman of CIPW’s Business Development Committee. In addition to serving clients, Lisa has published three books, Girl Talk, Money Talk. The Smart Girl’s Guide to Money After College; Girl Talk, Money Talk II. Financially Fit and Fabulous in Your 40s and 50s; and CI Brightworth’s first book, Building Your Wealth Inside Corporate America. Lisa has been featured in The New York Times, The Wall Street Journal, YahooFinance, CNBC.com, and many more. A frequent speaker at seminars across the country, she also produces a podcast series, Taking Stock with Lisa Brown, with regular financial content for busy professionals, in under 30 minutes.




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