I don’t know about you, but most people I know have either been laid off at some point or have a close friend/family member who has been. I have been laid off twice…once in Boston at an internet start-up and once here in Los Angeles. In Boston, we had a week off for the Christmas holiday and on the Monday when we came back, we knew something was off: there were empty moving boxes by each one of our desks. I was very upset that I had been laid off but not as upset as the fact that they could not have called me that morning before I spent an hour commuting on the train. For the job in LA, I found some paperwork on a copy machine that someone forgot, so I knew it was over before they knew I knew it over. Anyway, I digress. The fact is that layoffs can happen to anyone at any time, so you can never bet on your company keeping you in the money. A member of my family worked for a small accounting firm for years…and just got laid off out of the blue. Here is a guy that busted his a** for the company for all that time and they just chucked him aside. He has a mortgage, a car payment, bills, a girlfriend, etc…the trappings of a “normal” life. But even though he never expected that they would lay him off, he is OK with it.
His emergency fund. Not his vacation fund nor his checking account nor his credit cards. Actual money, set aside over the years, for these “WTSHF” situations. He is viewing this layoff as a chance to do something different, take some time off to explore his options, etc.. He is not worried because he has the money to back him up; that’s what it is there for. So even though he really thought it would never happen, he was still preparing. And because of that, he was ready.
Just because you have been at your job forever, you escaped the last round of layoffs, the boss is your twice-removed Uncle or you think you are indispensable, you can still be laid off. Lowest employee on the pay rate ladder to the highest senior manager, anyone can go at anytime. This is not the old days when companies took care of us; it is up to us to take care of us now. And part of that is being ready for anything.
So be like that person in my family and set up that emergency fund. You have to start now because emergencies can happen anytime.