As oil prices have fallen, energy companies have tried to shore up their finances and that ultimately means cutting their workforce. Companies throughout the oil and gas industry have made some of the most dramatic cuts to both their capital investments (new upcoming projects) and to their current workforce in recent memory.
You may not be able to control this situation, but you can prepare yourself to make smart financial decisions to cope with this transition.
Recently, I spoke with Chad Seegers, a CRPC® designated Financial Planner at Insight Wealth Strategies, about what an individual should do in this uncertain time. Chad and Insight Wealth Strategies have educated and advised hundreds of clients who have fallen victim to recent layoffs. The questions you may be asking yourself right now may be some of the same questions that Chad’s clients are asking, such as:
I’ve just been laid off… What are the immediate steps I should take to avoid a personal financial crisis?
- Evaluate and reduce your current expenses:
- If you haven’t already, put together a list of all your expenses. You may want to use one of the various software programs available to understand your cash flow and spending habits.
- Highlight some expenses that can be trimmed or removed, if necessary.
- Categorize your expenses into wants and needs (an electricity bill is a need, where a weekly massage is a want).
- Research your benefits package. Don’t rush into making any benefit election if you don’t fully understand the impact of that decision.
- Update your résumé & LinkedIn profile, start looking for other opportunities and talk to the contacts you have made in your industry and beyond.
- If you foresee an immediate cash crunch, identify non-essential assets (boats, motorcycles, guitars etc.) that you may be able to sell in a bind.
I’m not being laid off, but I don’t know if I am prepared; what should I do to be ready?
- Have an emergency savings (6 months of expenses for dual-income households, 9 months of expenses for single income households.)
- Have a retirement plan: This is extremely important as it helps in determining whether or not further employment is necessary. Ensure that this plan includes medical and other insurance costs that would be applicable in the event of a layoff or retirement. This is employer specific as every employer will have different benefit packages.
Although these tips may help, they are by no means a complete set of answers to the questions you may have. In order to fully grasp your unique situation, you should consult a financial planner as soon as possible. A financial planner can help you understand your current level of preparedness and help with the critical decisions about company benefit elections you may need to make such as:
- Should I take COBRA or Retiree medical (if offered)? Should I get on my spouse’s coverage?
- What do I do with company stock that I have accumulated in my 401K?
- What are the tax implications if I’m not 59.5 and need to access retirement funds?
- Do I need full employment? Or would a lower or part-time salary bridge me to retirement? Which will best accommodate my situation?
- Have I properly analyzed and met my goals? Maybe this is the much needed sabbatical I would never have taken on my own. Perhaps now is the time.
Insight Wealth Strategies is a comprehensive financial planning firm that specializes in working with current and former employees of the oil and gas industry.
Consult a financial planner today to evaluate your financial health. Don’t wait until you get a pink slip.
Chad Seegers is a registered representative and investment advisor representative of Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor, offering insurance through Lincoln affiliates and other fine companies. Lincoln Financial Advisors and its representatives do not provide legal or tax advice. You may want to consult a legal or tax advisor regarding this information as it relates to your personal circumstances. Insight Wealth Strategies is not an affiliate of Lincoln Financial Advisors Corp.