Laura answers a listener's question about getting financially organized after getting fired or leaving a job.
Laura answers a listener's question about getting financially organized after getting fired or leaving a job.
Money Girl is hosted by Laura Adams. A transcript is available at Simplecast.
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Welcome back to Finance Friday, another special edition of Money Girl, where I answer your burning money questions! Today's topic comes from Leon, who says:
"After 15 years of working for a corporation, I was let go due to a learning disability. I returned the company's vehicle and am working on my resume to apply for new jobs. What steps should I take to get financially organized regarding my 401(k), health insurance, and leasing or buying a car? Also, should I let my next employer know that I got fired?"
Leon, I appreciate your question and am sorry you lost your job. It sounds like you're moving in the right direction to get back on your feet financially.
This post will review seven ways to manage your finances after a voluntary or involuntary job change. It's essential to be prepared for the unexpected and avoid costly mistakes no matter why you separate from an employer.
Thanks for downloading episode 923 of the Money Girl podcast! I'm Laura Adams, an award-winning author, money speaker, on-camera spokesperson, and founder of The Money Stack, a Substack newsletter. You can subscribe for free or become a paid member with access to live educational events!
You can learn more and connect with me at LauraDAdams.com. That's also where you can email your money question, learn more about my books and courses, and sign up for The Money Stack. You can also record a brief question or comment on our voicemail
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7 things to do after getting fired or leaving a job
Here are seven things to do after getting fired, laid off, or deciding to leave your job.
1. Take your time reviewing paperwork.
If you get fired, your employer will likely have documents they want you to sign immediately. I recommend never signing anything when you're surprised or pressured. Instead, ask how much time you have to return any documents so you can review them with a clear head or a trusted professional, like an accountant or attorney.
The rules for firing an employee vary by state. If you believe you were wrongfully terminated, immediately consult a labor and employment attorney for guidance.
If you voluntarily leave your job, securing another opportunity before you resign is always best. Giving two weeks' notice is a minimum expectation that you should discuss with your direct manager first. But even if you provide plenty of notice, there's a chance you could get asked to leave right away–so be prepared for anything that could happen when you resign.
2. Ask for documentation about the circumstances.
If you get terminated for any reason outside of your control, such as changes in the economy, mergers, or restructuring, ask for documentation that explains the specific circumstances. Carefully review a termination letter for accuracy, and don't hesitate to ask for any errors or omissions to be corrected.
Before you leave an employer voluntarily or due to a layoff, ask for written recommendations from your direct manager, human resources department, and co-workers. That will give you a leg up as you start looking for your next job.
No matter why you part ways with an employer, stay positive and remember that moving on is just a part of being a professional, and every job adds to your experience and network. So, do your best never to burn professional bridges, even if you get fired.
3. Negotiate any severance compensation.
Depending on your role and circumstances, you may get offered a severance package, such as a month or two of pay. However, there's usually room to negotiate, especially if you suspect the package is below industry standards.
If you ask for extra severance compensation and the company won't agree, request other benefits instead. For instance, they might be more willing to cover your health insurance for additional months or write multiple letters of recommendation.
If you receive a final paycheck the same day you get laid off or fired, double-check that it's accurate and includes any unused paid time off or sick days you're entitled to. However, for most large layoffs, you might not receive a final check for several weeks as the company processes many terminations.
When you voluntarily leave a job, you may have some room to negotiate your exit compensation. For instance, if your company can't easily replace you, they might pay extra for you to create documentation about your role, remain employed until you train a replacement, or work part-time over a transition period.
4. File for unemployment.
If the reason you get laid off or fired is not due to "cause," such as poor performance or violating company rules, you can apply for unemployment benefits. They replace a portion of your income while you look for your next job.
Leon mentioned getting fired due to a learning disability. Some states may have regulations or considerations for individuals with disabilities, so I'd recommend that Leon go ahead and apply for unemployment. If he's ineligible, his state will let him know.
You can start at the Department of Labor website, CareerOneStop.org, to learn how to apply for unemployment benefits in your state.
Even if you think you'll find another job quickly, filing for and receiving unemployment benefits can take time, so applying right away is worthwhile in case your job search takes longer than expected.
Most states allow laid-off workers to collect unemployment benefits for up to 26 weeks. However, in some cases, if you receive severance payments, you may not qualify for unemployment until they stop.
You're never eligible for unemployment payments if you voluntarily leave a job. The purpose of the benefit is to support workers who unexpectedly lose their jobs and income.
5. Shop for various insurance.
After you get fired or voluntarily leave a job, your benefits, such as health, life, and disability insurance, typically end on the last day of the same month. Even if you negotiate to extend those benefits for a little while, shopping for replacement policies is wise.
Unless you work for a small business, you're typically eligible for COBRA continuation coverage for up to 18 months. COBRA is a benefit that allows you to continue the same medical, dental, and vision insurance you have through an employer. However, the premium could be much higher than what you paid as an employee.
If you get a new job quickly, paying COBRA to bridge a short coverage gap might make sense. However, if you don't know your next career move and want to save money, I recommend shopping for health and dental insurance at the federal marketplace, Healthcare.gov. Depending on your expected annual income and family size, you may qualify for a substantial subsidy that reduces or eliminates your premiums.
Remember that going without health insurance for any period is risky. A quick trip to an emergency room for a broken bone or illness could leave you with a massive bill. So, make replacing your health insurance a top priority.
You may also need to replace other policies like life and disability insurance. You can compare quotes using a site like Finder.com or Policygenius.
6. Know options for your retirement plan.
If you have a 401(k) or a 403(b) with a former employer, you have multiple options that are not as time-sensitive as insurance, so you can wait to make a decision.
Once you're no longer employed, here are some good options for your retirement plan:
Another benefit of having money in a workplace retirement plan is that you can begin taking penalty-free withdrawals as early as age 55. Plus, some plans allow you to take a retirement account loan that you repay with interest. However, you'll have more restrictions on tapping a workplace retirement account than having money in an IRA.
RELATED: Is it better to have a traditional IRA or Roth IRA?
7. Begin your job search.
Leon mentioned that he is working on his resume, which can help you create job profiles on various career sites like LinkedIn, Indeed, Monster, and Glassdoor. They automatically match your skills and experience with job openings on their platforms. You can also create helpful alerts for specific opportunities, such as those in a particular pay range, industry, company, or city.
Most job recruiters use LinkedIn to find candidates, so refresh your profile and change the settings to show that you're looking for work. The more descriptive your resume and career profiles are, the more likely you can get discovered by prospective employers.
You can also send your resume to your professional contacts and friends so they know you're looking for an opportunity. While networking can feel awkward, think about it as reconnecting with colleagues and friends you care about. Find out what's happening in their lives and careers, then tell them you're searching for a new opportunity.
Leon asked whether he should let a prospective employer know he got fired. It's OK to show you're unemployed, but I wouldn't include getting fired on a resume. I wouldn't proactively tell anyone unless they specifically ask about the circumstances for leaving your previous job.
In that case, you should be truthful about what happened without dwelling on it. So, be prepared with a brief, honest response about why you got terminated.
If you have a good attitude about your previous employer and the skills, experience, and work ethic you plan to bring to your next job, it can outweigh the past. Making the most of a layoff or termination could be a positive change that sets you up for a better career and future.
Before we go, here's a quick reminder to subscribe to The Money Stack, my Substack newsletter, when you visit LauraDAdams.com. It's filled with money tips, tools, news, challenges, and things I enjoy! You can subscribe for free or become a paid member with access to live educational events.
That's all for now. I'll talk to you soon. Until then, here's to living a richer life!
Money Girl is a Quick and Dirty Tips podcast, and I want to thank our fantastic team! Steve Riekeberg audio-engineers the show. Brannan Goetschius is our director of podcasts, Holly Hutchings is our digital operations specialist, Morgan Christianson is our advertising operations specialist, and Nathaniel Hoopes is our marketing contractor.