Career transitions are rarely simple. A layoff can knock the wind out of you. Burnout can sneak up slowly until even a regular workday feels impossible. And sometimes, what you want is something new, but the idea of giving up a steady paycheck feels too risky to even consider.
In those moments, it’s easy to feel overwhelmed. You may start questioning your choices, worrying about money, and wondering if now is the “right” time to make a move.
Even when you’re excited about what’s next, fear and uncertainty can cloud your judgment. And if the change wasn’t your idea, like in the case of a layoff or health issue, it can feel like you’ve lost control entirely.
The good news is that a financial plan can help you prepare for job layoffs and career transitions with more clarity, confidence, and control. Let’s talk about how to build one.
Career Transitions Are More Common Than You Think
It might not be something we talk about at dinner parties, but people sometimes go through work life and income shifts. Sometimes it’s a layoff. Sometimes it’s burnout that’s been building quietly for years. And sometimes, it’s just the growing sense that the job no longer fits.
Career transitions can look like:
- Being laid off after a company restructure and needing to figure out what’s next
- Hitting a wall with burnout and realizing a sabbatical or career pivot is no longer optional
- Taking time off to care for an aging parent or support a partner through illness
- Returning to work after parental leave, and wondering if the old job still fits
- Leaving a job that pays well but feels misaligned with your values or energy
- Navigating mental or physical health challenges that impact your ability to stay in a demanding role
- Choosing to retire earlier than expected because life circumstances have shifted
- Starting a business, freelancing, or consulting, and facing the uncertainty of unsteady income
- Scaling back hours or shifting careers to create more time for family, passion projects, or rest
These aren’t rare situations. They’re real life and they all deserve financial plans that reflect what’s happening and not just what’s expected on paper.
What Financial Planning May Look Like During a Career Transition
Financial planning during a job change is more than cutting expenses or holding your breath until the next paycheck. It’s about giving yourself structure, flexibility, and options when everything feels in flux. Here’s what that may look like in practice:
1. Clarifying How Long You Can Afford the Transition
One of the first things to get clear on is your financial runway. How long could you realistically go without a paycheck or a substantially smaller one?
To figure this out:
- Total up your core monthly expenses. Focus on needs like housing, food, health insurance, utilities, and transportation. Set aside wants for now as you’re trying to get a baseline.
- Review your cash reserves. Include checking, savings, and any liquid investments you could draw from without penalties. Don’t include retirement accounts unless you’re prepared to navigate taxes and early withdrawal rules.
- Do the math. If your essential expenses are $6,000/month and you have $30,000 in available savings, you’re looking at roughly 5 months of breathing room before cutting back or adding any income.
- Factor in income gaps and buffers. If you’re receiving severance, unemployment, or part-time income, add that in. However, it’s important to be conservative because it’s better to be pleasantly surprised than caught short.
- Decide on your “minimum viable lifestyle.” What are you willing to pause or reduce temporarily? Dining out, travel, subscriptions? Knowing where you’re flexible gives you more control.
2. Mapping Out Your Cash Flow in Real Terms
You may be using savings, tapping severance or unemployment benefits, or relying on a partner’s income. This is the time to get honest about what’s coming in, what’s going out, and what needs to shift (even temporarily) to stay balanced.
Here’s how to approach it:
- List all sources of temporary income. This might include severance, unemployment benefits, a partner’s salary, rental income, or even occasional freelance work. Get clear on what’s reliable and what’s temporary.
- Track your spending, not just your budget. Use real data from the past few months to see where your money is going. Tools like YNAB or your bank’s export feature can make this easier. Focus on patterns, not just line items.
- Separate essential from flexible. Essentials are non-negotiables (mortgage, groceries, insurance). Flexibles are negotiable for now (subscriptions, clothes, takeout). Knowing the difference helps you create a realistic interim plan.
- Consider timing. If your severance lasts three months and unemployment starts after that, plan for the shift. Build a cash flow calendar so you can see where shortfalls might occur and plan around them.
- Look for low-effort adjustments. Maybe it’s pausing savings contributions temporarily, reducing grocery delivery, or refinancing a loan. Small changes can extend your runway without drastically altering your life.
- Check in monthly. Your situation may evolve quickly during a transition. A simple monthly check-in helps you stay proactive, not reactive.
3. Planning for Health Insurance Gaps
Health insurance often gets overlooked in the emotional and logistical chaos of a career shift, but it can be one of the most urgent (and expensive) pieces to address. If your coverage was tied to your employer, losing that job may leave you facing a coverage gap at the exact moment you’re also managing stress or burnout.
COBRA can offer continuity, but it sometimes comes with a hefty price tag. A partner’s plan might be an option, but eligibility windows can be narrow. The state exchange may offer more affordable coverage, especially if your income dips during the transition, but navigating those options can be confusing if you’re already overwhelmed.
If you are also dealing with medical issues, this is probably not the best time to switch insurance plans, even if you may be eligible for subsidies on the AHCA marketplace. You may lose your favorite doctors and providers.
The key is to do your research and act early. Too many people wait until the last minute, only to face delays in coverage or surprise bills. It’s worth taking the time to weigh your options, understand your true out-of-pocket costs, and choose a plan that protects your health and your financial stability while you’re between roles.
4. Reviewing Employer Benefits, Stock, and Retirement Accounts
Walking away from a job often means walking away from more than just a paycheck. There may be hidden or time-sensitive value tied up in your employer benefits, and if you don’t look closely, you risk leaving money on the table.
For example, vested stock options might be nearing expiration. Health savings or flexible spending accounts may have balances you can still use. You might be eligible to roll over and grow your 401(k), or you may need to take action to preserve old life or disability coverage.
These are parts of the financial foundation you’ve already built, and they deserve attention before you move on. Even if it feels like one more thing on your plate, this kind of review can uncover resources that extend your runway, support your goals, or protect your future self.
5. Adjusting Investment Strategy Without Panicking
If you’re relying more heavily on your savings, or if your timeline for accessing funds has changed, your portfolio may need to reflect that. This could mean rebalancing toward more stable assets, reducing volatility, or setting aside a short-term cash reserve so you’re not forced to sell investments at the wrong time.
The key is to make changes calmly and not to abandon long-term goals or try to “play it safe.” It’s about building flexibility into your investment strategy so your money can support your next steps, not limit them.
6. Making Space for Emotional and Mental Health
This part of planning often gets left out, but it shouldn’t. Career transitions are emotionally taxing, especially when they come after a layoff, burnout, or major life shift. Even when you’re choosing the change and are excited about it, it still takes a toll. The pressure to bounce back quickly can feel intense, but real healing and clarity don’t happen on demand.
That’s why your financial plan should include space for things like therapy, coaching, rest, or even just unscheduled time. These are investments in your ability to re-enter the workforce confidently. So, give yourself permission to slow down, regroup, and move forward with intention.
How a Planner Can Help You Prepare for Job Layoffs
A financial planner can’t prevent a layoff or predict when burnout will push you to make a change. However, they can help you prepare so that you’re not scrambling when that moment comes.
Working with a planner gives you structure. You can map out how long your money will last, where your pressure points are, and what needs to shift. You can look at real numbers instead of vague worries.
A planner can also help you think beyond the financials. If you’re considering a job change, they can help you evaluate the tradeoffs, like time, income, flexibility, stability, and build a plan that supports your next move.
Most importantly, a planner brings perspective. When everything feels uncertain, it helps to have someone who’s seen this before and who can walk you through your options without judgment.
This kind of support helps you stay afloat and continue working on your goals. We’re also great cheerleaders and happy to give you a boost when worry gets the best of you.
Planning for Change Is Planning for Growth
Career transitions can feel messy, emotional, and uncertain, even when they’re welcome. They can also be the beginning of something better aligned, more meaningful, or more sustainable.
Planning for job layoffs and career transitions doesn’t erase the discomfort, but it does give you direction. It helps you move through change with fewer surprises and more confidence, even when you’re not sure exactly what comes next.
If you’re thinking about making a shift or are already in the middle of one, you don’t have to figure it all out alone. Start by filling out a short questionnaire to see if we’re a good fit to work together. This might be the first step toward the clarity you’ve been looking for.
Jessica Lanning, CFP®
Email: [email protected]
Phone: (415) 354-5699
LinkedIn: linkedin.com/in/jessicalanning
YouTube Channel: Lanning Financial on YouTube
Lanning Financial Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.
