This post was to align with the America Saves Week (#ASW2015) day for family communication and financial education. Gather the family around the virtual campfire and prepare for the conversation of your life. Now is the time to let go of any family taboos around discussing money. This is especially true if you have children living at home. You can adjust your talking points, depending on the ages of your children, but you need to be in on this as a team. Before we get to the five things, two suggestions for framing:
- Be truthful-mom or dad is going to lose her/his job and we have to prepare for that soon.
- Be reassuring – mom or dad will be getting a new job after that, and we need your help now to get there.
You could also set up the discussion and introduce some crucial concepts like this: “In our family, we have needs and we have wants. Our needs include food for everyone (we won’t forget our pets!), a roof over our heads (explain the difference between rent and a mortgage to older kids, be more abstract with younger ones), paying for the heat, lights, phone and Internet service, child or after school care that allows parents to work outside the home, and transportation to get family members where they need to go. We will keep our health insurance so everyone can stay well and get their teeth cleaned.”
Wants will be different from family to family and be prepared to give examples at the campfire. High-speed Internet may be a legitimate need for business purposes, but several sports channels are going to be in the want column, unless you’re a sportswriter. Adults and kids can make changes in different ways.
As Benjamin Franklin might have said, the following three activities revolve around being healthy, wealthy and wise. I’m adding two more intangibles: go actively towards the next destination, instead of away from what you’re doing now, and be sure to use your own roadmap.
Health: Know what you’re up against! Is health insurance part of your severance agreement? Do you have severance? Tip: If your last day of work is early in the month, your group coverage usually extends through that month. So a last day at work of May 1st is better than April 30. Post-layoff choices could include COBRA, a group plan through your professional organization or union, a family policy from your state’s exchange (using the Affordable Care Act) or going without coverage. Going without health coverage could derail your family finances in a hurry if an emergency comes up. If a large layoff is rumored or several months out, immediately catch up on any work-related reimbursements for transportation, child care, parking or flexible spending accounts (FSA).
Tip: Make those routine appointments ASAP.
Wealth: Do you have at least nine months of income or expenses set aside? A year or even 15 months of expenses would be better, or a working spouse who can supply the income and benefits to cover you or your family as you move forward. List all loans, debts and upcoming fees and rank by amount and interest rates. Two schools of thought on retirement deferrals: Keep making the minimum contribution to get the company match—the thought being that it might be awhile before you can resume contributions; or cancel your salary deferral in order to boost your emergency fund or pay off debt. Paying off debt will require some serious family discussion. What makes you feel more secure—a larger rainy day fund or less debt? Can you stop adding to any debts, and reduce credit card use while you prepare? If so, move forward with that. here is a link to a free budgeting tool.
Tip: Automate all minimum payments so that your credit history is not harmed.
Wisdom: How well prepared are you to meet the intellectual and emotional challenges of being laid off and seeking new employment? Who will be on your kitchen cabinet, helping to advise you as you move forward? What about that LinkedIn profile? What about certifications, or continuing education? Can you use a tuition reimbursement benefit? Who will be part of your new work community? (Check out local co-working spaces for some ideas).
Tip: Create a family gratitude list, so you can keep in mind the non-material riches you already have.
Embracing the Hunt What are your strengths? Create a list of what your preferences are in a career, (often harder than the deal breakers) to leverage those in the next position. Do you have a side job that is begging to sit at the grown-ups table? A friend of mine is tired of teaching, but she is a talented quilt designer. Perhaps that is her next career.
Tip: A good career counselor can save you lots of time.
Roadmap Draw your own! I cannot stress this enough. It’s ok to have a tour guide though-that means you can ask for help. A map made for someone else can be seductive. But your brother-in-law’s map may not work for you.
As George Harrison sang, “If you don’t know where you are going, any road will get you there.”
Your next position has to come from what is best for you, so that when you are stuck at the side of the road, whether in Tacoma, Toronto, or Timbuktu, you have created a map to the best destination for you and your family, after the layoff and beyond.
Note: An earlier version was published on Nerdwallet’s Advisor Voices page.