How to Build a Post-Layoff Financial Survival Kit

Getting laid off isn’t just about losing a job. It’s about waking up the next morning with a million questions and no clear answers. What happens to your income? How long will your savings last? What bills do you really need to pay first?

It’s okay if you don’t have it all figured out right away. What matters most is taking small, steady steps to get your finances under control. This guide walks you through how to build a post-layoff financial survival kit—one that helps you make smart choices without adding extra stress.

Let’s break it down.

Understand Where You Stand

Before you start cutting costs or moving money around, take a clear look at your financial picture. How much do you have in checking and savings? What bills are coming up? Are you carrying any credit card balances or loans?

Make a simple list—what’s coming in, what’s going out, and what’s left. If your employer gave you a severance package, make sure you understand how it’s paid out.

Many people also ask—is severance pay taxable? In most cases, yes, it is. Severance pay is usually treated like regular income. It’s subject to federal, state, Social Security, and Medicare taxes. If you receive a lump sum, it might even bump you into a higher tax bracket. That’s something to plan for before you spend it all.

If your severance is paid in smaller installments, the tax impact may be easier to manage. Either way, factor it into your budget as taxed income, not the full amount you received.

Rethink Your Monthly Budget

Now that you know where things stand, it’s time to adjust your spending. Think of this as a reset. Your goal is to stretch what you have until you’re back on your feet.

Start by looking at your monthly expenses. What can you pause or cancel right now? That might be streaming services, gym memberships, meal delivery plans, or other nice-to-haves that aren’t essential. You can always bring them back later.

Try switching to a cash-based or debit-only system. This makes it easier to stick to a set amount and avoid surprises. Keep it simple. Pick a weekly spending limit and stick to it.

Prioritize the Right Bills First

When money is tight, not all bills are equal. Focus on what matters most: housing, utilities, food, insurance, and transportation. These are the things that keep you safe, fed, and mobile.

If you’re worried about paying a certain bill, don’t wait until you miss a payment. Contact your service provider or lender and explain your situation. Many companies offer temporary hardship plans or deferred payment options. You just have to ask.

Remember, paying the most important bills first gives you stability and room to breathe.

Tap Into Emergency Funds Wisely

If you’ve set aside emergency savings, this is the time to use it—but use it carefully. Break your total into monthly or weekly chunks so you don’t overspend too quickly.

Let’s say you have $5,000 in emergency savings. Decide how many weeks or months you want it to last. Then set a spending limit that matches that timeline.

Track everything you spend, even small purchases. You can use a spreadsheet, a notebook, or a free app—whatever helps you stay on top of it.

Understand What Help Is Available

Government benefits and community programs exist for a reason. Don’t feel bad about using them. If you’re unemployed, apply for unemployment benefits as soon as you’re eligible. It can take a few weeks to process, so don’t wait.

Also, look into programs that help with groceries, rent, or utilities. These may include SNAP, LIHEAP, and local food banks or housing aid programs.

Even if you think you might not qualify, it’s worth checking. The rules are always changing, and help is there for people who need it.

Bring in Temporary Income

While you look for a new full-time role, consider ways to bring in short-term income. You might pick up freelance projects, do delivery work, offer tutoring, or sell unused items online.

If you have a hobby or skill that people value—like writing, graphic design, pet sitting, or fixing bikes—you may be able to turn that into extra cash.

Every little bit counts. Even $200 or $300 a month can make a difference when you’re trying to stretch savings.

Pause Debt Payments If Needed

If your income has dropped sharply, it may be time to put certain debts on pause. Start by calling your lenders. Ask if they offer temporary hardship programs. You might be able to defer or reduce your payments on credit cards, student loans, or even your mortgage.

Just be sure you understand the terms. Some plans only delay payments, while others may still charge interest. Always ask if pausing will affect your credit score or cause any penalties later.

The goal is to reduce stress now, without creating bigger problems down the road.

Protect Your Health Coverage

Losing your job often means losing health insurance. If your employer offers COBRA, you can keep your plan, but you’ll likely pay the full cost yourself. It’s not cheap.

Another option is the health insurance marketplace. Depending on your income, you may qualify for a lower-cost plan or even subsidies that reduce your premiums.

Don’t go without coverage if you can help it. One medical emergency can wipe out your savings. At the very least, look into short-term insurance plans as a stopgap.

Keep Your Long-Term Goals in Sight

It’s easy to feel like your financial future is on hold. But this is just a chapter, not the whole story.

You may need to pause retirement contributions or delay a big purchase. That’s okay. What matters is making choices that protect your current stability.

Once you’re earning again, you can rebuild. And because you’ve taken the time to create this financial survival kit, you’ll be better prepared than before.

Getting laid off is hard. No one plans for it, and no one wants it. But it doesn’t have to derail everything. When you have a plan—and a few simple tools—you can move forward with more confidence and less panic. This survival kit isn’t about being perfect. It’s about taking back control, one step at a time.

You’ve got this.