Loss of a Job

The changes that you face in your work life are not always in your control, but in the event of an unexpected job loss, you will have financial decisions to make while transitioning to a new job. You can maintain a sense of financial security with the help of your former employer, the state, your saving habits and the bank to keep your credit score intact and minimize how the loss of a job impacts your finances.

Your Former Employer
Know when your health benefit coverage expires and if you can continue receiving coverage from any of the company plans. You may also be able to collect income from any unused vacation days.

Find out how long you will have access to your flexible spending accounts or health savings accounts and if they are transferable.

Negotiate the best severance package you can when you are exiting. Request letters of reference from those you worked with, especially supervisors, which you can later share during a job application process. Highlight your skills and accomplishments in your resume or portfolio that you can present to a future employer.

Your State

If you qualify, file an unemployment insurance claim with your state. You can visit the United States Department of Labor website for more information, or call the Department of Labor at 877-US2-JOBS to find your local unemployment insurance agency.

Within 45 days after your last day, your former employer is required to send you an application for Consolidated Omnibus Budget Reconciliation Act (COBRA) health care coverage, which gives you access to your former employer's group insurance plan after you leave the company. Depending on your specific situation, you may have from 30–60 days to elect COBRA coverage, and you may be eligible for up to 36 months of continuation coverage. However, COBRA coverage can be more expensive than your former group coverage since employers usually pay for part of their employees' coverage.

Your Budget

Reassess your budget to determine how you can cut back on your expenses. Try to identify recurring monthly expenditures that you can realistically do without, so that you're able to maintain a sustainable lifestyle while you're job hunting. The goal is to avoid dipping into your savings.

Resist the temptation of withdrawing money from your 401(k). Early withdrawals are cut with a 10 percent penalty by the federal government and possibly another 10 percent withdrawal tax depending on the state and the applicable income taxes on the distribution itself.

Your Financial Institution

Consult with a personal banker who can provide budget planning assistance and help you create a debt management plan to keep your finances in order as you're transitioning between jobs. If you have a personal loan, you can request a reduction in your interest rate or ask to suspend a few monthly payments for a limited period of time.

If you're a homeowner, you can make a request to modify your mortgage loan. You may qualify for the Home Affordable Unemployment Program (UP), which can reduce mortgage payments down to 31 percent of your income or suspend payments altogether for 12 months or more.