Source: Quarterly newsletter published for the MD chapter of the American Society of Training and Development
By: Angeline M. Huffman, MBA

A layoff can happen to any of us at any time and no longer carries the stigma it once did. Layoffs are so common today that they are now referred to as “in transition” or “transitioning”. T&D's January 2004 article “New Careers for Trainers” provides hope for trainers facing possible layoffs due to the growing use of e-learning and outsourcing by organizations. The article discusses various new or evolving careers that use the skills trainers develop, such as, blended learning facilitation and whole life coaching. And what do you do if you are forced to apply your skills to these new careers through corporate downsizing or layoff? Of course you polish up your resume and start looking for one of these new careers for trainers, be it through new employment or starting your own business. But how do you survive financially as you go through this transition?

In this article I discuss financial strategies on preparing to survive a transitioning period, whether it is due to a layoff, or by choice to start your own business. In next quarter's issue, I will follow up with additional strategies for surviving a “transition” for which you are unprepared.

Preparing financially for a work-life transition is simple but not necessarily easy. Preparation begins with discovering, and applying, the Financial Freedom Cycle® to your financial life. As trainers, this cycle should be very familiar to you as it is reminiscent of W. Edwards Deming's “Plan-Do-Check-Act” Quality Cycle. (See Figure: The Financial Freedom Cycle®) Begin the Financial Freedom Cycle® by determining your financial goals. Why do you work to earn an income? What do you want that income to accomplish, or buy, for you over the next 1, 5, and 10 years? Write these goals down. Assign each goal a timeframe and dollar amount. Two goals that should be at the top of your list are establishing an emergency fund and becoming debt free.

The next step in preparing financially for a career transition is establishing an emergency fund, a basic short-term goal of the Financial Freedom Cycle®. Determine how many dollars you will need to cover at least 6 months of household and personal expenses. If, however, you believe it would take longer than 6 months to find a new job, guesstimate how long it would take to replace your job and then double that number of months. This fund must be saved in the safest and most easily accessed savings vehicle, such as a bank savings account. This fund is not just for the possible event of a lay-off, but can also be used for those unexpected life events that throw a spending plan into chaos (major car repair, child's extended illness). But make sure you replenish this fund immediately after the crisis passes. Establishing an emergency fund is the most important strategy for financially surviving a layoff. In addition, an emergency fund gives you peace of mind so you don't worry and cause your work to suffer every time the rumor of layoffs circulates throughout your workplace.

The next step, and another part of the goal setting stage of the Financial Freedom Cycle®, is to work towards becoming debt free. Debt, in and of itself, is not a bad thing. Debt helps us to buy those things for which we could never save enough money fast enough, such as a house. However, we Americans tend to over-use debt in the form of consumer loans, better known as credit cards. It is this debt that impacts you the most should you find yourself unexpectedly unemployed. You might be able to handle the credit card bills while the income steadily pours in, but think about what would happen if the income was suddenly not there. Begin today reducing that credit card debt so you can better weather a transitioning period.

Once you have put the Financial Freedom Cycle® into practice by determining your financial goals, creating your spending plan, and modifying your financial behavior you'll be able to plan for financially surviving a possible career transitioning period. Add to these strategies, establishing an emergency fund and becoming debt free, and there won't be a career, or life, transition you cannot handle. But what do you do if a layoff hits you before you're prepared? See next quarter's article.

Do you need more information or help on the stages of the Financial Freedom Cycle® or eliminating your debt? Would you like to bring a workshop to your organization or group on any for the financial concepts presented in this article? Then contact Angie at Huffman Financial $olutions: 410-256-9700 or ahuffman@hfs-associates.com.

HF$ provides financial coaching and tax planning/preparation services to individuals, as well as accounting, leadership development and employee empowerment solutions to businesses through a unique combination of training, accounting and finance experience.

Reference Document: click here.

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