In this episode of ThimbleberryU, we dive into the financial uncertainty researchers are facing due to upcoming NIH funding changes. Many professionals in research and healthcare are dealing with shifting grant structures, including caps on overhead costs for already-funded projects. These changes create job security concerns and financial stress, so we focus on practical steps individuals can take to gain control over their financial situation.
The first step is assessing financial security. We discuss the importance of emergency savings—understanding how many months of expenses are covered in cash and adjusting based on job risk. Fixed versus variable expenses come next, distinguishing between unavoidable costs like mortgages and flexible spending like entertainment or dining out. Debt management is another key area, ensuring that individuals understand their obligations, interest rates, and potential flexibility in payments.
Beyond immediate financial security, we talk about the importance of understanding job stability. If layoffs or funding cuts are on the horizon, it’s crucial to be proactive—whether that means increasing savings, cutting non-essential spending, or exploring additional income sources like consulting or teaching. Healthcare coverage is another major consideration, and we encourage listeners to research COBRA, marketplace insurance, or partner coverage options before a crisis hits.
For those already facing job loss, prioritizing cash flow is essential. Cutting unnecessary expenses, filing for unemployment, negotiating with lenders, and leveraging professional networks can help mitigate financial strain. We emphasize the importance of staying connected—networking can lead to unexpected opportunities.
Finally, long-term financial planning remains critical. Maintaining a flexible budget, keeping emergency savings replenished, and ensuring retirement investments align with financial security goals all contribute to financial resilience. Having an updated resume and staying aware of career opportunities can make transitions smoother if funding cuts impact employment.
The key takeaway: focus on what you can control. By taking small, proactive steps each day, researchers and professionals can navigate uncertainty with confidence.
NIH Funding Changes and Job Security
Speakers: Jon Gay & Amy Walls
[Music Playing]
Jon Gay (00:08):
Welcome back to ThimbleberryU, I'm Jon Jag Gay. I'm joined by Amy Walls from Thimbleberry Financial. Great to be with you as always, Amy.
Amy Walls (00:13):
Jag, it's good to be talking to you.
Jon Gay (00:15):
So, today, we're diving into an important topic for researchers, and that's financial uncertainty due to funding cuts. I know you have a lot of experience in the realms of tech and healthcare, so we're going to really talk about some of these NIH funding changes coming up. But some of this will actually apply to listeners in any walk of life.
But I know many professionals in research are worried about job security and what that's going to mean for their financial future. So, let's get into it, Amy.
Amy Walls (00:41):
Yeah, so we do have a lot of clients in healthcare and in research (healthcare research), and what I think most Americans know is that changes are being made to NIH funding, and what's going to be funded going forward.
What isn't as well-known is that changes are coming down for grants that have already been funded. So, some of the changes have limited the amount that can be spent on overhead in existing grants. So, the research is already in place and the budget set, and all of a sudden, on funded grants, for example, there have been caps on how much of that grant money can now go to overhead utilities, et cetera, when that research is in process.
So, if you are a researcher and you're listening to this, we understand the problem. Whether we want to call it chaos or shenanigans, the fact of the matter is right now, if you're in this research space with NIH funding, we understand you're living in limbo and that is hard.
Jon Gay (01:48):
A lot of uncertainty, and we're not getting political here, we're just talking about facts. And this is a reality for a lot of listeners and a lot of your clients. So, when someone faces uncertainty in their career, Amy, what's the first financial step they should take?
Amy Walls (02:02):
I think the key is to take control before the financial stress builds. Now, obviously, it may already be there, so maybe we should say before it builds further.
Jon Gay (02:14):
Okay (chuckles).
Amy Walls (02:15):
And we do that by assessing a financial situation, the foundation, to get some security. Checking in on security can add some stability and comfort and decrease that stress level.
So, first thing I'd say there, it's a basic, emergency savings. Figuring out how many months’ worth of expenses you have on hand in cash. That means in the bank, buried in the backyard, in your mattress – wherever it is you keep your cash, and actually knowing where you're spending and how much you're spending because that spending changes over time.
We've had inflation over the last couple of years, we've found some clients say, “Oh, my expenses haven't changed,” and they've changed drastically when we gently push back to say, “With inflation, this doesn't really make sense.”
Jon Gay (03:04):
Just look at the grocery bill every week or every month as your example A-1.
Amy Walls (03:08):
Exactly. And so, getting clear on: This is what we are truly spending, and this is how much I have. And so, I have this many months of expenses. Now, if you're a single income household, that's how many months you have. If you're a dual income household, hopefully that other income might not be subject to the same risks. But we definitely have couples that both incomes are tied here to grant research.
Jon Gay (03:34):
And you're getting near something I wanted to mention too, and that is we say three to six months is ideal. It's going to vary by the individual or by the couple or by the family.
So, three months might work for some, six months might work for some, some might need nine, some might need two. It really depends on the situation and really having your finger on the pulse of what you're spending looks like.
Amy Walls (03:54):
Absolutely. There's no good rule of thumb. In this case, we're looking at just what's the foundation, so where are you starting from? And later, we'll talk about evaluating if that's the right amount.
So, second thing is, of those expenses you just identified, which ones are fixed expenses? Meaning you're not going to change them or you're not going to be able to change them much. Those would be things like your mortgage, utilities, insurance, debt payments. And then which ones are variable? Which ones do you have more opportunity to control?
So, for example, groceries, to some extent, are going to be a fixed expense. We get some variability there, but we have to eat. The variable expense here is really the dining out or beverages, or that kind of the extras that come with that.
And it's those variable expenses that if you've identified them, you'll be in a better position later on after we finish the foundation to figure out should some of these, or do I want to try to change some of these.
Jon Gay (05:04):
Things like out of the house entertainment, going out to a show or a concert, and even in-house entertainment like how many streaming services do you subscribe to.
Amy Walls (05:14):
Yeah, exactly. I’ll share a variable expense. Last year, it wasn't for this reason, but we had a big trip to Europe planned, and we had the “day of disaster.”
Three huge expensive things happened in a single day, and we said, “Nope, the responsible thing right now is to not take this trip. We'll postpone it a year,” and I think it was a good choice. But that was taking one of our variable expenses and saying, “Yep, we're just going to put this on hold.”
Jon Gay (05:44):
Okay, so emergency savings (number one), fixed versus variable expenses (number two), what's number three?
Amy Walls (05:48):
Number three is going to be debt management. Truly knowing what your debt obligations are, interest rates, do you have flexibility in any of the payments?
If we're talking to our clients in research, if they have debt, they may be making extra payments, especially if they're higher interest rates. This may or may not be the time you want to continue doing that. So, knowing exactly how much extra you're paying and what choices you have is important.
Jon Gay (06:15):
Along those same lines, I think it's worth mentioning: a lot of credit card companies and banks, if you have outstanding debt, if you endure some sort of financial hardship like loss of a job or something like that, sometimes (not in all cases) they'll work with you to be a little bit flexible on the payments. That's worth looking into also.
Amy Walls (06:33):
Absolutely. And then job security and timeline is what I'm going to say is number four. Really, now that you've got hopefully some security through looking at the other three things, it is what is the reality of the job situation? What's the conversation happening internally?
Are there talks of funding cuts internally? What is the timeline that that sounds like it's happening? Is a layoff eminent? What is the likely reality? And then be a little conservative, because of course, we don't know. And that allows us to set up an action plan.
And the last thing I'm going to say here around a foundation is financial independence. We're talking about this, and I think in many cases, the worst case is going to be people losing jobs. Where are you in relation to your goals for financial independence or retirement, depending on which one's more important to you?
So, some of the people facing this are very close to retirement. They may be able to retire; they may already be financially independent. But I know from our clients who work in this field, they throw their heart and soul into this work, and they want to see the research they're doing come to an end before they retire.
So, it can be sometimes difficult to, I think recognize that, “Wait, oh yeah, I am able to retire. Or what tweaks would I have to make to retire a couple of years earlier?”
Jon Gay (08:08):
It's separating that emotional attachment to the work that you may be very passionate about, from the hard numbers of, “Okay, if my job went away, I could retire or be financially independent tomorrow. The numbers say that I'm where I need to be.”
Amy Walls (08:22):
I think you hit the nail on the head there by talking about separation. It's separating this thing, this work that is so personal to you from the numbers.
Jon Gay (08:31):
Okay, so that's our foundation, Amy. Once someone knows where they stand, what should they do next?
Amy Walls (08:37):
So, I alluded to some of this, but there's a couple of immediate steps to take. One, strengthen the emergency savings if it needs to be strengthened. So, if you're really worried, it doesn't hurt for a period of time to build up some extra cash. You might be someone who says, “Gosh, I want to keep a minimal amount of cash on hand because I want my money really growing for me in the market.” That's a terrific concept in many cases.
But if you're up against what might be a potential job loss or salary decline, or we don't know what this is going to look like, it might be time to just sock away some cash until you have some clarity.
Jon Gay (09:18):
Absolutely.
Amy Walls (09:19):
Second thing is cutting those unnecessary expenses. If you've got a big trip plan that you can postpone depending on the size compared to your income, et cetera, it might be the time to consider holding off. It could also just be some of your regular spending if you've got some regular splurges built in.
Jon Gay (09:37):
That stuff we talked about earlier, like dining out, streaming subscriptions, or that fun money, I guess we call it.
Amy Walls (09:44):
Yep. Know your health insurance options. So, many people get their health insurance through their employer and your employer can already tell you what COBRA costs are. You could also play with what is the marketplace insurance going to cost. Go in and play with it, put in your income and figure out what that looks like. Explore your spouse's or partner's plan if that's applicable to figure out what that means from a cost perspective.
The health insurance piece is such a big important number, and it's an area that oftentimes when I talk to people who are facing something like this, they feel paralyzed in terms of how do I go about figuring out what that might look like?
Jon Gay (10:26):
It's such a big piece of people's finances, sadly, that health insurance is so big and that it's also tied to your employment in this country, and that makes for a really stressful situation.
Amy Walls (10:35):
Yeah. Fourth, I'd say avoid taking on new debt. So, maybe you were considering a new vehicle and there was going to be some debt attached to that, maybe a vacation – whatever it is, now might not be the best time now.
Flip side of that, perhaps you were looking at moving (if it's not an upgrade) not to a much more expensive home – if you're worried about the money, now might be a great time to do it while you still have that employment and income and can make that work if you're planning on a mortgage.
Jon Gay (11:08):
Got it.
Amy Walls (11:09):
And then look at additional income sources. Many of our clients who work in research do some side consulting or have other income opportunities, and so perhaps, there's opportunities there.
Jon Gay (11:24):
We talk about the gig economy. Some people will pick up a part-time job and love it. It may not replace the income you were making before you lost your job, but you might actually get some personal satisfaction out of that.
Amy Walls (11:37):
Absolutely. One of the ones I've heard people enjoying most, especially for someone who's maybe been a researcher or in this kind of a professional capacity, is sometimes teaching.
Jon Gay (11:49):
Ah, gosh knows we need more teachers.
So, Amy, we've talked about preparing for a potential layoff, but sometimes it happens out of the blue or you don't see it coming. What should someone do if they've already been affected by a layoff or a funding cut?
Amy Walls (12:05):
Jag, it's a great question. If this has already happened, obviously, the focus has to shift to immediate action and prioritizing cashflow. Number one, cutting those non-essential expenses and focusing on maintaining liquidity is important. Mortgage payments, utilities, groceries, those things come first.
I hear this one – people forget to file for unemployment if they're eligible. That's an important step to take.
Jon Gay (12:36):
Side note on that, from personal experience. I was in a situation where I had been laid off and my former employer hadn't filed the paperwork correctly and my unemployment claim got denied, so I had to appeal it.
Number one, don't forget to file for it. And number two, if they say no, don't be afraid to appeal it. And if you feel you're owed unemployment, definitely pursue it as far as you can.
Amy Walls (13:01):
Absolutely agree. You want to do your research, you want to follow through and not just say, “Eh, it's enough.” Jag, you addressed this earlier: talk to your lenders. You may have an opportunity, maybe you're newer in your career and you've got some student loans. You can explore deferment, forbearance, refinancing, all of these are options. And then last, leverage your network.
Jon Gay (13:24):
Oh, yeah.
Amy Walls (13:25):
Connect with colleagues (well, or former colleagues, I should say in this case), professional groups, former employers, all of these places, anything you can think of to explore new opportunities.
Jon Gay (13:37):
Networking is something that was drilled into my head back in college and everywhere I've been since, and you'd almost be surprised how helpful people are. If you maintain good relationships with folks both in real life and online, you'd be surprised how often somebody will come in and say, “Oh, I saw your post about losing your job, I heard about this. Maybe you want to go talk to this person. They may have an opportunity for you.”
I think people overlook that, so I'm so glad you mentioned that one.
Amy Walls (14:04):
It's so important. And you're right, it's so easy to overlook. It's I think making yourself vulnerable. Who wants to think about putting themselves out there and saying, “Hey, I’d love a job.” But I think it quite frequently pays off for the people who are brave enough to do it.
Jon Gay (14:19):
Absolutely. So, we've talked about what happens to prepare for a layoff, we've talked about what happens if it catches you off guard, but Amy, how can someone proactively position themselves financially so they can pivot if these funding cuts we've been talking about impact them?
Amy Walls (14:34):
As I said earlier, it's kind of the same answer. The best way to navigate this career uncertainty is to prepare before it happens.
So, really, what I'd say as a foundation, something I talk to clients about – even if your cash reserve, your emergency savings is built, continue to save into it. It's there for emergencies and opportunities. At some point, you're going to need to spend it down. You need to have some way to add to it. So, treat it as an ongoing priority so that you're always prepared.
Keep your budget flexible so you can adapt quickly as things happen. We want to avoid locking ourselves into a rigid position or what I like to call backing ourselves into a corner by not having wiggle room, not having the ability to pivot when we need to.
Regularly assess your career opportunities to stay ahead of shifts that may be coming, and that includes keeping your resume updated. You may be loving your job, you may love where you're at, the culture where you're at, but having a resume ready is great because that is one of those mental obstacles that when you need it, it's harder to get that done and done well.
Jon Gay (15:46):
Forgive the dark analogy here, but we've done some episodes on estate planning, Amy, and we've talked about how hard it is to process somebody's estate when you're in the stress and the moment of grieving.
But the similar dynamic is at play here, if you are grieving a job loss or you are emotionally stunned or upset about a job loss, you don't want to be taking these steps when you're already in a stressful position. You want to put things in place ahead of time when you've got a cooler head on your shoulders.
Amy Walls (16:13):
Exactly. And it's sometimes hard to figure out or to think through, how do I build this in? Maybe it's something that once a year you add to an annual cadence of things you do, just like we've talked about checking your credit once a year. You can just make sure your resume is updated.
And last thing I think I'll say here about preparing ahead of time is know that your investment and retirements plans align with long-term security goals. So, what I really mean by that is (and we've talked about this previously), I could create a plan for someone that puts everything into their retirement account, and if they aren't 59 and a half, they're going to have a really hard time accessing that money.
Jon Gay (16:56):
Sure.
Amy Walls (16:57):
Life happens, Mr. Murphy happens, right?
Jon Gay (17:02):
(Laughs) I hate his law.
Amy Walls (17:04):
(Laughs) Absolutely, he should not be allowed to make laws. And so, making sure you've got flexibility that your plan allows you to adjust and pivot. It's one of the things that I love about the fact that I know clients in healthcare, and I know clients in tech because we learned what some of the obstacles that they more commonly are going to run into that we need to be prepared for.
Jon Gay (17:29):
Well, as you mentioned, Amy, that is kind of your area of focus at Thimbleberry Financial. What is one last piece of advice you'd give to researchers who are just feeling overwhelmed by all the headlines right now?
Amy Walls (17:40):
What I'm going to say is researchers tend to be very good at what they control and influence, and keeping that in mind. And I think it's the same here, even though it's not your job, it's your life that we're talking about now, focus on what you can control. Focus on what you can influence.
Take small steps each day, whether you are in this space and living in this limbo of NIH funding, or you've already lost your job. Take small steps to improve that financial security each and every day, and know that you've done the things you can do.
Jon Gay (18:17):
Serenity Prayer about give me the courage to only worry about things I can control and the wisdom to know the difference, right?
Amy Walls (18:23):
Absolutely.
Jon Gay (18:24):
Amy, valuable information as always, especially in these areas that I know you focus on. We're recording this on February 13th, we don't know what the future is going to hold. Planning ahead is going to make those transitions so much smoother.
So, if somebody wants to take advantage of your expertise at Thimbleberry Financial, how do they best reach you?
Amy Walls (18:41):
They can give us a call at (503) 610-6510, or they can find us online at thimbleberryfinancial.com.
[Music Playing]
Jon Gay (18:51):
Great stuff as always, Amy. We'll talk again in a couple of weeks.
Amy Walls (18:54):
Sounds great, Jag.
Voiceover (18:55):
Securities offered through registered representatives of Cambridge Investment Research, Inc, a broker dealer, member of FINRA/SIPC, advisory services through Cambridge Investment Research Advisors, Inc, a registered investment advisor. Cambridge and Thimbleberry Financial are not affiliated.
Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions.
Securities offered through registered representatives of Cambridge Investment Research, Inc, a broker dealer, member FINRA/SIPC, advisory services through Cambridge Investment Research Advisors, Inc, a registered investment advisor. Cambridge and Thimbleberry Financial are not affiliated.