Do You Have a Plan for a Career Setback?

The idea of losing your job, or experiencing a large cut in your hours, is probably not one that you want to think about. However, the reality is that the economy is changing, as is the job landscape. I’m a freelancer, and I don’t have to worry about being “laid off,” but even I think about what might happen with a career setback.

A couple of years ago, one of my major clients was acquired by someone else, and after more than five years of working with this client, I suddenly saw a dip in my “regular” monthly income. I was fortunate in that I had other options and was able to recover fairly quickly, but I’ve thought about preparing for financial setbacks related to my career since then.

While it isn’t pleasant, it’s a good idea to have a backup plan in place.

What Resources Do You Have?

The first step is to consider your resources. What options do you have? What financial resources can you call on? Some of the financial resources that you might have include emergency funds and other assets.

You might also consider whether or not you can borrow money from friends and family in a pinch. If your hours are cut dramatically, you might not be able to qualify for unemployment benefits. However, if you are laid off, one of the first things you should do is take advantage of the local unemployment resources.

Get a full picture of the assets you have available to you, and your resources. From the ability to get a part-time job if needed, to a job that your spouse might have, or to a side business you have started, consider alternative sources of income.

Look at your resources, and consider boosting them so that you have something to draw on if you do experience a career setback.

Do You Know What You Will Cut from Your Budget?

When I lost that client a couple of years ago, I immediately began thinking about which items needed to be excised from my monthly expenses. Looking through your bills, you might be surprised to find that you have wiggle room to cut things like eating out, outsourced cleaning and yard care, extracurricular activities, cable, and other costs.

Now is the time to take a hard look at your expenses. You might be living within your means right now, and you might be able to afford what you spend your money on, but it doesn’t hurt to know what you could do without if you had to. As a result of my little scare, I know exactly what I would cut first if I needed to. I have a list of priorities that need to be funded (like my mortgage and insurance premiums) in order to maintain my long-term financial viability, and I know what I would cut back on.

Because I already have these items identified, the hard decisions are already made, and I can move into emergency mode quickly.

Are You Providing Yourself with Ongoing Improvement?

One of the best things you can do as you plan for the possibility of a career setback is to keep your options open. You can do this by constantly improving your skills and knowledge. Develop marketable skills, and you will have an easier time transitioning to a new job if you need to.

You should also make sure that you keep your resume and cover letter up to date, and that you connect with members of your career network regularly. When you keep up with these activities, you are always ready at a moment’s notice. You will be ready to identify and seize opportunities if you keep your options open.

In the current climate, it pays to be prepared. Look at your finances, and your career, and make sure that you are ready for the possibility of a setback.

Have you completed these tasks? Would you say you’re ready for a career setback? What are you going to do to get ready? Leave a comment!

Miranda writes about personal finance almost every day. An experienced freelance writer, she's covered your money online and in print from every angle and is always looking for new ones.

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