Q&A: I lost my job a few months ago. When should I start to panic?

A new reader question on The Joint Account.

Sep 22, 2025

QUESTION: I was laid off over the summer and given three month’s severance, which is running out soon. Finding a new job is taking longer that I expected, and I am starting to worry that if I don’t find something soon, we’ll be screwed. When should we start to panic?

ANSWER:

Losing your job is brutal and can hit your mindset as much as your household’s cash flow. Many of us link our self-worth to our paychecks, which creates a double blow of financial and emotional strain when you’re let go from your job. Money is more than just money.

The issue is that panicking over it will cloud your judgment and push you into quick-fix decisions you might regret later. The last thing you need is to feel like you’ve lost control, which is why it’s so important to focus on what you can control, like how to approach your spending and knowing the proper order of operations for whittling down your savings and investments, if it comes to that. I want to focus on the technical side of this issue today, so let’s break it down.

In a period of unemployment, the pressure to cut everything can feel almost compulsive. Your instinct might be to slam on the brakes, cancel your subscriptions, stop eating out, and strip life down to the bare minimum so you can make your savings last as long as possible. But going too far, too fast can make your household feel even more unstable.

A better approach is to focus on being more intentional. Look critically at your spending, but don’t treat every dollar as the enemy. Ask yourselves: What expenses hold our family together? What can we scale back or pause for now without making life too uncomfortable?

Flipping the switch to a life of complete and utter austerity measures can have a dramatic impact on everyone, adding a secondary stress to an already stressful situation. When you make deliberate choices, you remain in the driver’s seat.

Once you’ve examined and modified your day-to-day spending, the next question is where to pull money from if unemployment stretches on for a while. This is where planning pays off.

Here is how I frame it with clients:

Start with cash. Your emergency fund is not a trophy to admire. It is a tool to use. Three-to-six months of expenses is the rule of thumb, but as a business owner, I prefer six-to-nine. If you’ve got any cash savings, good on you. I know this isn’t the moment to be Monday Morning Quarterbacking what you saved or didn’t save. My point is, if you have it, don’t be afraid to use it. Take can take pride in the fact that you built a cushion for exactly this reason. This is what all that discipline and planning was for.

When cash runs out, look to liquid, non-retirement investments. Selling from a taxable brokerage account is often the next best step. There may be tax consequences, but they are usually better than the tax and penalties that come from tapping retirement savings too early. You can even sell methodically and gradually, so you do not take too much out of the market at once in case a new job comes through sooner than expected.

Retirement accounts are a next-to-last resort. Roth IRAs do offer some unique flexibility. You can withdraw the money you contributed (your principal) at any time without taxes or penalties. This is an option that many people forget about in tough times. But while it’s available, it’s almost always best to leave Roth dollars (if not all retirement dollars) untouched if possible. Spending them down early takes away future tax-free dollars that you cannot easily replace. For other accounts, like traditional IRAs or 401(k)s, be cautious. Early withdrawals are typically taxed as ordinary income tax plus a 10% penalty. Even strategies like the 60-day rollover comes with risks if you cannot get the money back in time.

Borrowing comes dead last. Whether from a bank, credit cards, or family, debt is a slippery slope. It may bridge a short-term gap, but it can easily leave scars that last far longer than the job search itself. Interest costs, repayment obligations, and strained personal relationships can compound the stress you’re already under.

With that said, sometimes debt is the only option left. If you reach that point, the key is to be deliberate:

Prioritize lower-cost borrowing. A personal loan or a home equity line of credit is typically less damaging than running up high-interest credit cards.
Borrow with a plan. Map out how much you truly need, and how you’ll repay it once income resumes. Treat it like a bridge, not a lifestyle extension.
Communicate openly. If you’re leaning on family or friends, clarity about terms and expectations is essential to avoid resentment later.

Losing a job can shake your finances and your confidence, but it doesn’t have to define everything about your life. By being intentional about spending and knowing the order of operations for your assets, you give yourself the best chance to weather this season without derailing your long-term goals.

Remember, this is not forever. A job is a role you play; not your entire identity. Hopefully, the discipline you’ve shown in building savings, investing, and planning will carry you through hard times. And if you’re going through it with a partner or family, lean on each other. Communication, honesty, and teamwork are as important as any financial tool.

Last Wednesday, I was invited to speak at the inaugural Marketing to Men Summit, where brands, businesses, and creators to come together to challenge how we think about men today, and how to engage men more authentically as leaders and brands. Using lessons from our new book, I spoke about motivating men to plan for their financial futures with both partners engaged in the process. It was an amazing event and has inspired me to dive more deeply into the topic of topic for an upcoming edition of TJA.

TJA in the News

It’s going to be hard to top last week’s feature in the NYT Your Money Newsletter, but I had two appearances on CNBC (one in print and one on TV). The first was this segment on Worldwide Exchange where I encouraged investors to be proactive around their investment strategy. If you’re feeling nervous, you’re going to want to watch it. Then, I weighed in on New York’s first ever inflation refund and what to do with that extra cash. Over on CNN Business, I was featured on how to gain control over your finances by putting together a financial plan. It’s as Advisor core as it gets.

Also, Heather wrote an excellent think piece for She Knows about parenting teens and young adults, and the top money lessons we should strive to give them as we send them into the real world.

Free estate planning webinar and copy of Money Together, courtesy of Steward

Steward, a modern estate planning and trust administration company, has graciously offered to purchase a copy of Money Together for any readers of The Joint Account who sign up for a consultation with them between now and our publication date of October 28, 2025!

Also, we are so excited to have Steward’s CEO team up with us for a free webinar on couples and estate planning on Thursday, October 9^th from 1-2pm EST. All registered attendees of the event will also receive a free copy of Money Together, courtesy of Steward. Register today!

Shameless plugs

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The content shared in The Joint Account does not constitute financial, legal, or any other professional advice. Readers should consult with their respective professionals for specific advice tailored to their situation. The information contained in this post is general in nature and for informational purposes only. It should not be considered as investment advice or as a recommendation of any particular strategy or investment product. This post is not a solicitation or an offer to buy or sell any specific security. Bone Fide Wealth cannot guarantee the accuracy of information from third parties.