Layoffs have recently surged across industries, leaving many workers wondering: What should I do if I’m next?

From January through May 2025, there was an 80% increase in job cuts compared to the same period last year, according to a report by the business and executive coaching firm Challenger, Gray & Christmas. Retail layoffs alone soared by 274% year-over-year. With nearly half of U.S. managers predicting their company will lay off workers in 2025, preparing your finances is more important than ever.

“Stop the emotional spiral and start organizing,” Stoy Hall, CEO of the financial advisory firm Black Mammoth, told Investopedia. “Create a ‘worst-case-scenario’ budget immediately. Cut every nonessential item. You need to know how lean you can live—this isn’t panic, this is preparation. Clarity reduces fear.”

Key Takeaways If you suspect layoffs are coming, create a “worst-case-scenario” budget and cut all nonessentials immediately.

Calculate your financial runway by dividing your available cash and benefits by your core monthly expenses.

Review your benefits, last pay stub, and health insurance options as soon as possible to avoid losing access to crucial information.

1. Assess Your Financial Runway

Before you make any big decisions, get a clear picture of your financial resources. “Start by taking stock of what you have in all your bank accounts and liquid funds. Knowing exactly what resources are available gives you clarity and helps you make informed decisions about next steps,” Danika Waddell, founder of Xena Financial Planning, told Investopedia.

Once you know what you have, the next step is figuring out how long that money will last if your paycheck stops. “Add up your cash, savings, and any expected severance or unemployment benefits. That number? That’s your runway—in months,” Hall said. Divide this by your core monthly costs, such as housing, food, insurance, and minimum debt payments.

If it amounts to less than three months of expenses, act now: Look for side gigs or temp work before you need it. This kind of preparation is more important than ever as U.S. employers announced about 696,000 job cuts through May 2025. That represents an 80% increase from the same period last year.

2. Review Benefits and Health Insurance Options

Don’t wait until after you’re let go to gather important documents and review your benefits. “Check your last pay stub for unused vacation or [paid time off], your severance package, and your COBRA or health care options,” Hall said. If you delay, you could lose access to employer systems and critical benefits information.

Waddell suggests reviewing your separation agreement and understanding your health insurance timeline. “If there is a separation agreement, review and sign it quickly. Sometimes with an attorney’s help,” she said. “And don’t delay in looking into health insurance options. While you may have 60 days to opt into COBRA, marketplace plans can’t be retroactive, so you could face a coverage gap if you wait too long.”

3. Pause Debt Payoff, Build Cash, and Plan for Taxes

If you’re worried about job security, Hall recommends pausing aggressive debt payoff and shifting that cash into your emergency fund. “Put debt payoff on pause and shift that cash into an emergency fund,” he said. “Liquidity wins during uncertain times.”

Lower-income years may also be a smart time to convert part of a traditional individual retirement account to a Roth, since you’ll pay less in taxes now and grow it tax-free. But avoid withdrawing from your 401(k) unless it becomes necessary.

The Bottom Line

Facing a layoff is never easy, but taking action now can help you weather the storm. Build a lean budget, calculate your runway, and secure your benefits before you lose access. Losing a job isn’t a failure; it’s a pivot point. If you start preparing today, you’ll be ready to take your next step with confidence.