6 things to do after a job loss to steady your family’s finances

Losing a job throws everything off. Which bills should you cover first? How long will your emergency fund last? We reached out to a few experts who help families navigate this process, and they shared six steps to make the money side of a job loss a little easier to manage.

Step 1: Give yourself some breathing room

The first thing to do after losing a job is to make sure that some money is coming in, even if it’s temporary. “The immediate priority is to file for unemployment benefits and assess your cash runway,” says Josh Katz, CPA at Universal Tax Professionals. 

Consider a part-time job or freelance work in the short term to cover all your essential needs.

It’s also a good idea to take a closer look at the bills and transfers you have running in the background. “Pause all non-essential automated payments (e.g., subscriptions, non-critical savings transfers) to conserve liquidity,” suggests Katz. That way, you have more control over the ins and outs of your money. 

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Although it may feel uncomfortable, you may also want to call your landlord or mortgage provider to give them a heads-up. As Katz says, “This initial triage creates breathing room to make strategic decisions rather than reactive ones.”

Step 2: Separate the must-haves from the extras

When money is tight, it helps to visualize what’s essential and what can wait. “I tell people to get a clear picture of their finances,” says Marcel Miu, CFA, CFP, founder of Simplify Wealth Planning. “Start by tracking all your expenses. It’s easy to panic, but you need to know exactly where your money is going to take control.” 

And once you see it in black and white, it’s easier to start trimming. “Entertainment, discretionary spending, and non-essential subscriptions should be paused indefinitely,” says Katz. When making these cuts, it can be helpful to adopt a budget mindset – making cuts now doesn’t mean they’re permanent. 

Step 3: Protect the priorities

One of the most critical steps after a job loss is to cover your highest-priority bills. 

“Mortgage/rent and utilities like electricity and water are non-negotiable, as losing these destabilizes the entire family. Then, maintain health insurance, COBRA, or marketplace plans to prevent medical debt from compounding the crisis,” says Katz. Once you have your home and healthcare figured out, you can make a plan for the rest.

Miu adds that covering transportation (car payments and insurance) and debt are also important. He adds, “If severely cash-strapped, pay the minimums on credit cards to avoid penalties and keep your credit intact.”

Step 4: Use savings wisely

Once you have the priorities listed, take a look at your savings and see how far you can make it stretch. “Your emergency fund is your lifeline in tough times. Cover core expenses, calculate how long it’ll last, maintain insurance coverage, and resist the urge to splurge,” says Miu.

It’s equally important not to spend it all at once, though. “An emergency fund should cover 3-6 months of essential expenses, but use it strategically and avoid draining it all at once. Meter it out monthly to extend the runway,” says Katz.

If you don’t have a lot of savings, focus on using it for the basics. “If the fund is limited, use it for necessities only, and explore side hustles or gig work to supplement gaps before tapping retirement accounts, which should be a last resort due to penalties and tax implications,” says Katz.

Step 5: Avoid the common mistakes

When you’re stressed about money, it can be tempting to look for a quick fix, but this may make matters worse. “Many dip into retirement accounts (like 401(k)s) early, incurring taxes and penalties that worsen their long-term outlook,” explains Katz. “Others ignore bills, leading to credit damage that hampers recovery.”

Miu points to another trap: “The most common mistake is racking up credit card debt. It might seem like an easy fix at first, but it can lead to a dangerous cycle of debt.” 

Step 6: Talk to your kids about what’s happening

Kids seem to always know when things are off, even if you try to keep it quiet. However, explaining the situation in a way they can understand helps them feel part of the team and reduces their stress.

“Frame the conversation around teamwork and values, not fear,” suggests Katz. “For young children, explain that the family is focusing on ‘needs vs. wants’ for a while, like making it a game to find free activities (e.g., library visits, parks) instead of expensive outings.”

And if you’ve got teens, let them be part of the plan. “Teens can be involved in practical budgeting, and you can show them how grocery shopping with a list or cutting energy use helps the family,” says Katz. If your family uses Greenlight, you can even set up savings goals together so your kids have a hand in covering the extras they’re asking for.

Job loss is tough, but it doesn’t have to derail everything. Miu’s final thought captures it well: 

“By getting clear on your financial picture, prioritizing essential expenses, using your emergency fund wisely, and avoiding common mistakes, people can navigate this tough time with confidence.” 

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