When Sophie*, a 28-year-old office manager for an MP, lost her job along with her boss and an office's worth of staff in the 2015 general election, she learned the hard way the importance of creating a financial security net for yourself in the unlucky event of being laid off.
"Statutory redundancy rules applied, but I missed out on these as I'd been with my boss for just under two years," she tells Refinery29. Fortuitously, she had a couple of months' salary saved up. "It was very frustrating but has taught me an important lesson about planning ahead."
A seemingly growing number of young people in precarious employment, like Sophie, are recognising the need to create financial safety nets for themselves in the form of a 'layoff fund'. (Sophie now allocates around 15% of her monthly salary for this specific purpose.) The term was coined by journalist Gaby Del Valle last year, who was laid off from her first job after just five months and wrote an article about the financial stress she found herself under for MEL Magazine.
A layoff fund, Del Valle writes, is "similar to Paulette Perhach's 'fuck off fund'," referring to the viral 2016 essay which advised women to save in case they ever find themselves in sticky situations, "but instead of hoarding away my extra cash so I could use it to get away from an abusive boyfriend or a toxic job, I saved with the knowledge that someday, my job would tell me to fuck off. Similarly, it’s more purposeful than a vague, nonspecific emergency fund; it’s a way of preparing for a shitty situation that increasingly seems inescapable."
Mass layoffs have been chillingly prevalent in Del Valle's industry, the media, in recent months and years, both in the UK and US, with companies including BuzzFeed, Vice and HuffPost cutting dozens or more jobs, and others like The Debrief, The Pool and ShortList closing completely. But it's not just journalists who need to be prepared for the worst. "We are a generation that has grown up earning since the financial crisis, and not taking for granted that a job is 'for life' or that our employers will look after us," says Laura Whateley, author of the millennial-minded Money: A User’s Guide. More young people are going freelance, she adds, which may, on the one hand, mean greater freedom to move to a cheaper area or avoid a costly commute, but also means having no back-up if you fall ill, the work dries up or you're laid off from a regular employer.
Many women told Refinery29 they are saving to protect themselves in the event of the worst case scenario. Ade, 30, who works full-time in marketing in London, started saving into what she has dubbed her 'Shit Happens Fund' in January with the aim of having £1,000 by the end of the year, "in case anything were to happen to me job-wise". She tells us: "I put a minimum of £84 into this specific fund each month. I also have pots set up on my Monzo account so any spare change at the end of the month also goes into that account." She's on track, with £400 saved already.
Others have different rules of thumb, depending on their earnings and living situations. Carley Victoria, 35, an operations manager in London, puts 7% of her income into her layoff fund each month and currently has six months' worth of household expenses saved to cover mortgage, bills and the like. "The security blanket is very important to me, as I have imposter syndrome since getting a large pay rise. Even though I feel secure in my job, I keep thinking I’ll be found out," she admits. "My fund helps with that anxiety, especially now that I own a home down south, so our monthly outgoings are pretty big."
It’s imperative people prepare for uncertain times, especially as working conditions are changing.
Bola Sol, finance guru and entrepreneur
Victoria McNally, 28, who works full-time in marketing for a start-up in New York and has been laid off three times ("twice in media and once in publishing"), has been paying into her layoff fund for five years, but only christened it with that name after she lost her job for the first time. "I generally try to put in a little bit per paycheque, depending on how much I'm making and what my expenses are like that month. It's usually at least $100 (£77)," she says. "Every writer I know feels they should probably have [a layoff fund]. Whether they're able to afford to save money is another matter, but it's generally taken as a given now that job loss is inevitable in media and that finding a new position is much more difficult for writers who just lost theirs, because the pool of potential opportunities keeps shrinking and there's more freshly unemployed competition every day."
Who needs one?
If you're not fortunate enough to come from a wealthy family who would bail you out, then regardless of your industry, you probably need one. "It’s imperative people prepare for uncertain times, especially as working conditions are changing in light of technology and AI developments," says personal finance guru and entrepreneur Bola Sol. "If you don’t have a layoff fund I suggest you get one."
It's arguably an even more pressing necessity for those in a less financially secure position to begin with, including ethnic minority groups and those from lower socioeconomic backgrounds. Constance Gibbs, 29, a full-time writer at a magazine in New York who has been saving money "in case [she] got fired or laid off" since 2016, believes women of colour often have to take greater precautions than others. "As a Black person who grew up lower class, I’ve never had much money... Many Black people I know either are just trying to make it on their own, for themselves, or they use the money they make to give back to their families to help them either survive or finally thrive."
Systemic prejudices also sometimes end up playing out during mass layoffs, Gibbs believes. "People of colour in many offices and industries are at the bottom compared to their white colleagues so when layoffs come, we’re often the first to go, and we're perhaps already making less money. There are layers of historical and current injustices stacked on top of one another."
Starting your own safety net
As with any type of savings pot, there are myriad ways to start paying into a layoff fund. The first step is sitting down and working out your essential outgoings, advises Whateley. "That is, costs you can’t avoid – rent or mortgage, council tax and energy bills, and things like weekly food costs and commuting costs. Then work out how much you can afford to save [in your fund] and spend on other less essential stuff once all of this is taken from your earnings."
Companies couldn't care less about you and you need a cushion for the inevitable.
Sarah Solomon, 29, writer and content strategist
Create a savings account you don't have easy access to, which may mean disabling internet banking if that's going to tempt you, says Sol. Whateley recommends "apps like Chip and Plum [which] help you save a little bit without noticing. They will scan your account and using an AI-powered algorithm, work out how much you could put aside, doing it for you automatically."
The amount you choose to save ultimately depends on your circumstances; there are guidelines you can follow and money-saving tricks you can play on yourself. Francesca Burke, 23, a self-employed marketing consultant in Southend-on-Sea, is a fan of the GirlBoss 52-week money challenge, in which you start by saving $1 (or £1) and increase the amount by $1/£1 every week for a year. "I would absolutely delve into my savings if I lost a client. I live within my means but can't afford to lose the work I've got."
Sarah Solomon, 29, a full-time writer and content strategist in New York who was laid off from her first job at 22, suggests having "three to six months of living expenses ready at your disposal for emergencies," and outlines her experience in her upcoming book, Guac Is Extra But So Am I: The Reluctant Adult's Handbook. "While that's a ton when you're first starting out, I definitely prioritise it now." She learned from the experience that "companies couldn't care less about you and you need a cushion for the inevitable."
A "sad indictment of our society"
While it's great that young people are increasingly taking financial precautions, there's no denying the fundamental unfairness that underlies layoff funds. As Liz Emerson, cofounder of the Intergenerational Foundation, which promotes intergenerational fairness, tells Refinery29, the fact that many young people are having to anxiously save in case they lose their jobs – "rather than for positive life goals such as buying a home or starting a family" – is a "sad indictment of our society". The trend also, she believes, "might explain why younger generations are moving jobs less than older generations used to and their levels of wellbeing are 10% below those in 1995."
While being a symbol of financial uncertainty, layoff funds are also a sign of relative affluence: being able to squirrel anything away in the current climate is considered a pipe dream by many young people. Hazel Walsh, 32, a fitness instructor in Lancashire, lost her job in December without a layoff fund to fall back on. Just two months after moving into her first home with her partner (following an arduous mortgage-application process), she lost her job during a wave of local government cutbacks.
"I went into full meltdown mode," Walsh tells Refinery29. Having been self-employed for much of her working life, she used to rely on freelance work, but this had dried up owing to the conditions of her full-time role. "I stood to lose £1,200 a month. Over the Christmas period I hit a low, I piled on the weight stressing about how we would make ends meet and how to pay the bills and feed ourselves.
"While I’ve always saved up 20% of my paycheque, I used that money for holidays, emergencies like car repairs, and never really thought about having a layoff fund," she concedes. "I definitely learned from the experience and will start to save for a layoff fund at some point in the future, but for now we have to live month to month with little left over to start saving."
*Names have been changed