The Power Of Career Cushioning: Protect Yourself From Layoffs
Why Is Career Cushioning Important?
In the first year of the pandemic, the number of people laid off was double the average of the prior 10 years. While layoffs cooled off in 2021 and 2022, the numbers weren’t much better (32.4 million people lost their jobs in those two years). In 2023, layoffs continue to make headlines.
The biggest problem with layoffs is that you don’t see them coming and there isn’t always a method to the madness. Since humans are the ones making the choices, there will be bias, preference, politics, and many other subjective factors considered. Even the objective metrics (i.e. seniority, salary level, age, skills, performance reviews, etc.) are not going to feel fair or make things any more predictable.
One of the ways you can protect yourself from a layoff is career cushioning. Career cushioning involves building a safety net around your career by securing finances, building a strong network, and exploring alternative career paths. With career cushioning, you can adapt to changes in the job market and take on new challenges without feeling completely blindsided by a sudden layoff.
There are three strategies you can practice so you don’t get caught off guard if you get that layoff call. I have personally practiced all three of these strategies.
Start Building Your Reinvention Runway Fund
A technique that can transform a layoff into an opportunity is to allocate funds for unforeseen events. Look at your savings and investments and decide how much of that you can set aside to kickstart your Reinvention Runway Fund. If you can seed this fund with some upfront money, make sure it’s kept in a safe place like a money market account so it isn’t subject to market volatility.
Keep in mind, this is not the same as your emergency fund. That is a separate fund you should also have and is usually about 3 months of income saved for things like medical emergencies, car repair, ransoms (hopefully not), and other unexpected expenses that might pop up in life. Your reinvention runway fund is an integral part of career cushioning, especially for major career or life pivots that require time and space.
Once you figured out how much you can contribute to start your Reinvention Runway Fund (no worries if you can’t contribute anything), now it’s time to figure out how much you will need to fully fund it. First, calculate your minimum living expenses per month. Then add 10% to your total monthly expenses because a little extra never hurts. Multiply your new monthly total by at least 6 months and if you are in a position to save more aggressively, consider making it 12 months. This will be your total fund target.
Finally, determine how much you can set aside for this fund every month and divide your total fund need by the amount you can contribute each month in order to figure out how many months away you are from hitting your fund target.
Before the pandemic, I set my Reinvention Runway Fund target to 12 months of minimum living expenses. Why? Because at 40 years old and thinking about starting a family, I wanted more security, and I was in a position to save more aggressively. After seeding the fund with some of my savings, I needed another 14 months of contributions to hit my target.
Join a Community
An alternative method to prepare for the unexpected is to find a community that you can get involved with outside of your job. Don’t be picky because ultimately, this is more about human connection than it is about the topic. The community joined was the Startup Weekend community. I joined that community in 2015 and while the topic is no longer as relevant for me, I appreciate the human connections.
These human connections can help with your career cushioning because they ultimately lead to opportunities for whatever it is you are doing. Someone always knows someone that can help you. Even though I continue to move farther away from this topic, I continue to stay active in the Startup Weekend community. I still meet incredible people that provide inspiration and support along my journey.
You might already be part of a community and all you must do is become more active. If you aren’t, find one to join and don’t be picky. Talking to your friends is a great place to start because they can introduce you to theirs and you’ll already have one friendly face in the group.
Start a Passion Project or Side Hustle
This is the most important strategy of the three! Why? Because launching a project or side-hustle can be your ticket to:
- Discovering who you are (i.e. values, passion, and purpose)
- Creating future reinvention possibilities and pathways
- Contributing your Reinvention Runway Fund
- Connecting to a related community or building your OWN community
- Minimizing your need to draw on your Reinvention Runway Fund (since you’ll be making a little something on the side)
Passion projects and side-hustles have been my key to doing all of the above and more! I cannot stress enough how GAME-CHANGING this is to both your career cushioning and your reinvention strategy. Discovering who you are and planting the seeds to future reinvention pathways is priceless. Plus, the side-hustle income will help you reach your Reinvention Runway Fund target a lot faster!
Normally, if we need more income right away, we ask our manager for a raise. If you can do so quickly, you might even bring a competing offer to help make a stronger case. According to a report from Zippia, the average raise in the US was 7.6% as of 2022. Not much if you are in a hurry to build your runway fund.
Instead of arguing for a few percent raise, you can launch a side-hustle that can provide you with tens of thousands of dollars in additional income. The potential amounts depend on what you do on the side.
My side-hustles have included many things like: tutoring, coaching, teaching, speaking, consulting, etc. Other people do things like selling products online, performing freelance services, etc.
Here’s how much additional income I was able to generate from different side-hustles:
- Teaching gigs earned me close to $40K per year in additional income while I worked a 9-to-5.
- Speaking gigs have earned me between $5 to $15K per engagement and I used to book anywhere between 5-10 of those per year when I was working a full-time job.
- Coaching contracts earned me between $2-6K per contract and ranged from 6-18 hours of sessions per contract.
- When I tutored middle and high school math, I made almost $200 per hour, working about 4-6 hours per week.
The extra work didn’t feel like extra work because I absolutely LOVED every minute of it. All of these activities were aligned with my values, passion, and purpose. Ultimately, those side-hustles paved the way for the work I do today as a full-time entrepreneur.
The passion-project or side hustle is the most important thing you can start right away to create new possibilities for yourself and provide some career cushioning, whether or not you get laid off. This one strategy will ultimately help you learn how to generate income outside of your 9-to-5 and connect you to new communities by design. So if you only do one of these, launch a project or side-hustle!
Need some help designing your passion project or side-hustle? Book a complimentary Project Discovery call with me and I’ll help you out!