I just got laid off — what to do with my money first

Losing a job is disorienting, even when you saw it coming. The good news: the financial moves that matter most in the first few weeks are fairly predictable, and doing them in the right order protects both your cash and your options. Nothing here requires having it all figured out today — just getting a few things done before they become urgent.

The first 48 hours: don't sign anything blind

The first two days are about information, not action. The goal is to understand exactly what you're owed and when it stops.

• Read the severance agreement slowly, more than once. Severance agreements are legal documents, and most include a release — a waiver of your right to bring certain claims against the employer.
• If you're 40 or older, federal law gives you time. To validly waive age-discrimination claims, an employer generally must give you 21 days to consider the agreement (45 days in a group layoff) and 7 days to revoke it after signing (EEOC, Older Workers Benefit Protection Act).
• Ask HR, in writing, when your final paycheck arrives and how unused PTO (paid time off) is handled. Both are set by state law, not federal law, so the answer depends on where you worked.
• Confirm the exact date your health insurance ends. Often it's the last day of the month, but some employers end it on the termination date itself. That date starts the clock on your options.
• A signing deadline is usually a negotiating position. Asking for a short extension to review — or for more weeks of pay, extended health coverage, or a neutral reference — is a normal request.

The first two weeks: file for unemployment and sort out health insurance

These two tasks are time-sensitive in a way almost nothing else on this list is.

File for unemployment insurance right away

Waiting to file is one of the most common — and most costly — mistakes after a layoff.

• Benefits generally start from your filing date, not your layoff date. Most state programs don't pay for weeks before you applied, so a few weeks of delay can mean permanently losing those weeks.
• Benefits are capped. Most states pay regular benefits for up to 26 weeks, and some pay for fewer (U.S. Department of Labor).
• Rules vary by state. Waiting weeks, how severance affects your claim, and the weekly amount are all set by your state agency.
• You can often file right away, even while receiving a final paycheck or severance — the agency will ask about it and adjust your claim.
• Unemployment benefits are taxable income for federal tax. You can ask for 10% federal withholding with Form W-4V so the bill doesn't land all at once next April (IRS).

Compare COBRA and a Marketplace plan

Health coverage is usually the biggest financial decision in the first month.

• COBRA keeps your existing plan and network, but you can be charged up to 102% of the plan's full cost — the share your employer used to pay plus a 2% fee (U.S. Department of Labor). For job loss, it generally lasts up to 18 months.
• The COBRA window works in your favor. You generally have 60 days after your election notice to sign up, and if you do, coverage is retroactive to the day it ended. The first premium isn't due until 45 days after electing (U.S. Department of Labor). Some people use that window to shop Marketplace plans with a fallback in place.
• A Health Insurance Marketplace plan may cost less, because premium help is based on your expected income for the whole year — which a layoff may lower. It may also mean a different network of doctors.
• Losing job-based coverage opens a special enrollment period for Marketplace coverage, generally 60 days from the loss of coverage (HealthCare.gov).

The first month: build a bare-bones budget and figure out your runway

Once the deadlines are handled, the focus shifts to how much time you have — and protecting it.

Build a bare-bones budget

A bare-bones budget strips spending down to what keeps the lights on and food on the table — housing, utilities, groceries, minimum debt payments, insurance, and transportation. Everything else — subscriptions, dining out, upgrades — gets paused, not necessarily cancelled forever.

Calculate your runway

Runway is the single most useful number during a layoff. It turns "how long can I survive?" into a concrete answer.

Illustrative example:

• Total accessible savings: $9,000
• Bare-bones monthly expenses: $3,000
• Runway = $9,000 ÷ $3,000 = 3 months

Add $1,200 a month in unemployment benefits and only the $1,800 gap comes out of savings, which stretches the same $9,000 to 5 months. Benefits are capped, though — once they end, the full $3,000 comes out of savings again. And severance is taxed as wages, so the deposit is often smaller than the gross figure in the agreement.

Call lenders and utilities before you miss a payment

Many lenders, landlords, and utilities have hardship programs for exactly this, but they usually need to hear from you before a payment is late.

• Mortgage and auto lenders may offer a temporary reduction or pause, sometimes called forbearance.
• Federal student loans have unemployment deferment and income-driven repayment options — a lower income can mean a much lower payment.
• Utility companies in many areas offer payment plans or delayed disconnection.
• Credit card issuers sometimes offer temporary lower rates or minimums if contacted early.
• Calling first matters because a hardship arrangement is generally easier to get, and less damaging to credit, than catching up after you're behind.

Decide what to do with your 401(k) — later, not now

A 401(k) at a former employer doesn't need an immediate decision, and rushing it tends to be expensive.

• Leaving it in the old plan is usually allowed. Small balances are the exception: plans can cash out balances under $1,000 and move balances up to $7,000 into an IRA automatically.
• Rolling it into an IRA or a new employer's plan keeps it tax-advantaged, generally with no tax bill if done as a direct rollover.
• Cashing it out adds the full amount to taxable income, triggers 20% mandatory federal withholding, and — under age 59½ — usually a 10% additional tax (IRS).
• Rule of 55: if you leave a job in or after the year you turn 55, withdrawals from that employer's plan avoid the 10% penalty (IRS). Rolling that money into an IRA gives up the exception, since IRAs use age 59½.
• An outstanding 401(k) loan is often offset against the balance after you leave. You generally have until your tax-filing deadline, including extensions, to roll over the offset amount and avoid it being taxed (IRS).

Because the tax treatment depends on your age, the plan, and your overall situation, a plan administrator or tax professional is the right resource for specifics — this is one decision worth slowing down for.

Common mistakes worth naming, without judgment

None of these are moral failures — they're understandable reactions to a stressful situation. Naming them ahead of time can help avoid them.

• Cashing out a 401(k) in a panic in the first week, before exploring unemployment, severance, or hardship programs that might cover the same gap without the tax hit.
• Putting groceries and bills on a high-interest card by default, when a call to the lender or utility might have opened a lower-cost option.
• Waiting to file for unemployment and losing benefit weeks that generally aren't backdated.
• Signing a severance agreement immediately to "get it over with," without checking what it waives or how it interacts with unemployment.
• Forgetting benefits are taxable, then facing a surprise bill the following spring.

A layoff is an income shock, not a verdict on your finances or your worth. Working through this list roughly in order — paperwork, filing deadlines, then the slower budget and 401(k) decisions — tends to protect the most money with the least stress.