Your livelihood is under nearly constant threat. You could lose your job due to economic cuts, a changing market, or a personal illness. You might need to take time away, or you may have to deal with salary cuts or other financial issues in your career.
Fortunately, there are many strategies you can use to protect your livelihood—and ensure you continue to earn enough money to cover your bills.
Strategies to Protect Your Livelihood
These strategies, especially when used together, can significantly protect your livelihood:
- Diversify your skillset. One of the best things you can do is diversify your skillset. No matter how secure you think your job is, there’s a chance it will become irrelevant. You may be fired, laid off, or pushed out of the business you work for. But if you have a more robust skillset, you’ll have multiple options ahead of you. If the company likes you but has no need for your role, you may be able to transition to a new role within the business. Otherwise, you’ll be able to qualify for a wider range of alternative jobs. In the meantime, improving your skills could qualify you for a raise or promotion—so it can help you no matter what.
- Diversify your revenue streams. You’ve likely heard about the importance of diversifying an investment portfolio. This is a strategy designed to mitigate risk; having multiple types of investments means if any single investment fails, you’ll have plenty of backups to make up the difference. You can also make this strategy work for your revenue streams. Rather than putting everything into a single career and a single stream of revenue, you should consider establishing multiple streams of revenue. If you lose your job, you can fall back on a secondary source—like a rental property or a blog.
- Purchase critical illness insurance. Critical illness insurance is a policy designed to protect you if you ever suffer a critical illness, like heart attack, stroke, or bypass surgery. Ideally, you’ll have health insurance that can cover the majority of your health-related costs; however, you’ll still have out-of-pocket expenses to cover—and potentially, lost income from your inability to work. Critical illness insurance can make up the difference.
- Purchase business interruption insurance. If you run your own business, there’s a chance that a natural disaster or other catastrophe renders you unable to operate for a period of time. In addition to typical insurance (such as property insurance), consider getting business interruption insurance. If you get the right policy, you’ll be able to replace whatever income you lose during this interim.
- Purchase disability insurance. Similar to critical illness insurance, disability insurance is designed to protect you if you suffer an injury or illness that significantly disrupts your life. However, instead of a single lump sum payment, you’ll receive ongoing benefits from these policies. With a short-term disability insurance policy, you’ll be covered for injuries or illnesses that take you out of the workplace for a few months. With a long-term disability insurance policy, you’ll be covered if you’re rendered unable to work for an even longer period of time—sometimes until your retirement.
- Pick up a side gig. If you’re interested in making more money, you might pick up a side gig. There are many options available, including making money through collecting blog advertising revenue, selling crafted items, or even walking dogs. The primary purpose here is to supplement your income. However, you can also benefit by using your side gig as a backup plan. If you ever lose your main job, you can escalate your efforts in the side gig, potentially turning it into a full-time replacement.
- Professionally network. Spend some time professionally networking, meeting and engaging with new people. If you ever find yourself on hard times, you’ll have a wide network you can call upon to find new job opportunities and/or get referrals. It’s important to build your network long before you actually need it, so get started proactively.
- Put together an emergency fund. Finally, make sure you put together an emergency fund. You’ll want at least enough money to last you a few months, if not six months or longer. No matter what other safeguards you have in place, there’s a chance you’ll be in a rough spot someday; this pocket of funds will support you.
Planning for the Worst
It’s not fun to imagine worst-case scenarios or think about losing your job, but it’s better to plan for the worst and never tap into those emergency plans than to be caught off-guard by an unexpected turn of events. Spend some time on your contingency planning, and don’t let yourself be surprised by a sudden negative consequence.