The risk of layoffs is constant, even in a good economy with low unemployment.

Yet few are truly prepared for losing their job.

U.S.-based employers in January announced nearly 50,000 cuts, up 28% from the approximately 39,000 announced in December 2024, according to the global outplacement firm Challenger, Gray & Christmas. There is also the brutal purge of the federal government's workforce. The mass firings — which President Donald Trump initiated and an Elon Musk-led team has carried out — are far from finished.

Large layoffs that organizations orchestrate don't involve competency. Instead, the competitive environment has changed or the economy has taken a turn for the worse. (In the case of the federal workforce, the layoffs are politically motivated.) Whatever the reason, a useful personal finance exercise is to periodically ask yourself: "How would I manage getting laid off?"

The latest data from the Bureau of Labor Statistics said on average, laid-off workers are unemployed a little more than eight weeks. You can adjust that figure depending on your skill, the kind of job you're looking for, the health of the economy and so on.

The first exercise is to assess your finances. If you have a budget, figure out where you would quickly cut back on expenses. (If you don't have a budget, create one.) Understand your debts, and if you're unemployed longer than hoped for, see how you would prioritize debt repayments. ("Surviving Debt" by the National Consumer Law Center is a useful guide.)

The financial review might have an immediate impact. The exercise will show you where you can find money now to increase precautionary savings. You can use the financial information you've gathered to establish practical plans to eliminate outstanding consumer loans, such as credit cards.

Take the time to review your employer's policies on benefits if laid off. If your workplace provides health insurance, understand your options for maintaining current coverage and potential alternatives. Research the basics of filing for unemployment benefits in Minnesota. Update your résumé and keep your LinkedIn profile current.

Perhaps most importantly, nurture your network of colleagues, mentors and other key connections. Studies show about three-quarters of filled jobs come from networking rather than online applications. (The effectiveness of online applications will likely deteriorate further with the spread of AI agents encouraging ever more applications for posted jobs.)

Your network is your most valuable work asset in good and bad times.

Chris Farrell is senior economics contributor for "Marketplace" and a commentator for Minnesota Public Radio.