It seems every where you look these days, someone is being made redundant.
The Government has been well publicized for culling a significant amount of jobs at various ministries. But it is also happening at a private business level too. Companies seem to be simultaneously looking for ways to cut costs. And one of the easiest ways for companies to do so is to cut labour. Labour is the largest cost for many companies and it is much quicker for a company to release workers than it is to increase income.
It is a difficult time for many households as it is. Food and housing costs are through the roof. Not to mention insurance costs in many parts of the country, and if you are lucky enough to own a home, repairs and rates are increasing at astronomical speeds too.
Households are having to reign in spending to keep up with the mortgage and other costs. So talk of losing work is worrying for many kiwi families right now. It is not just the person losing their job that is impacted by job loss but whole household units. So the publicized numbers are always much lower than the true impact of job loss.
The best time to plan for a redundancy or loss of income is of course before you receive the news. But failing that there are a few things you can still do that may help.
Make a budget
Note down what is the most you could probably spend per year with your new income levels as a worst case scenario should you not be able to find other work for a while. Just knowing what that number is can provide some personal control which will in turn, provide at least some peace of mind.
Cut unnecessary expenses
If you have been informed you are losing your job and you know you will not have enough income to meet your needs, then you need to make some cuts to your spending instantaneously. Not after you have been made redundant, but as soon as there are whispers.
If you end up keeping your job or not being made redundant as soon as you thought, then you have yourself some extra savings. There is no downside to starting as soon as possible.
Now the longer you have been living a certain lifestyle, the harder it will be to give that up. But time is not your friend, and you need to learn very quickly how to live on the smell of an oily rag. Maybe it is selling your yacht. Or perhaps it is not travelling for a while. Cutting back your food spend to the basics. Cancelling your subscriptions and gym memberships. Whatever it takes to keep up with your housing and food costs. If you are paying more than the minimum on the mortgage, you may want to go back to paying the minimum for a bit. Perhaps even interest only repayments may be required until you find your feet.
It’s ok if you are unable to save any money for a while. Survival is the name of the game here. We go through seasons of life when it is more challenging. Just need to ride it out as best as possible until things turn for the better.
Restructure debt
It is much easier to get new loan terms when you have a job.
Check your asset allocation
Do you have enough cash to get you through this next period of your life? Or are you going to need more? Maybe you need to sell down some bonds or shares and convert to cash to get you through. The sooner you can do this the better, before prices go down further on these volatile assets.
Consider other sources of income
Once you hear news of redundancies within your company, that is the best time to start looking for work. The sooner you can get on the front foot the better. This is not the time for feeling sorry for yourself. It is very easy to feel useless and uncertain but slap yourself out of it. It can happen to anyone. Stay positive and keep your lens wide. This is a clean slate for you and time for you to consider any job you have been thinking about. Maybe you always wanted to try a certain industry and do something completely left field. This may be the kick you need to try that thing.
Share the news
It’s natural to feel embarrassed about redundancy, but it is nothing to be embarrassed about. As said, it really can happen to anyone and it isn’t personal (most of the time). You are not your job.
Let your friends, family and acquaintances know that you are going to be unemployed. Then you may have your own team of people putting out the feelers on your behalf. You may even land a job through one of your contacts talking with someone they know about your plight.
It’s always fashionable to be good with money
For anyone reading the blog for some time, hopefully a lot of you are well prepared for such an event already. The ideal time to prepare for job loss is years before the event.
The sooner you can trim your budget and work on multiple sources of income, the better off you will be in the future.
Having a significant amount of savings, low expenses relative to income, a good emergency fund, and multiple sources of income takes time and discipline. It’s because of these actions I was able to leave behind a job bringing in around $70,000 in the pocket earlier this year. We are sure going to miss the extra money, but what we are gaining is far greater. More time with the family and to enjoy life a bit more by not having to work so much. I understand not everyone is in such a position, but the point is the sooner you can prepare for a loss of work, the better off you will be. Redundancies are not nice on anyone, but they sure are a lot more pleasant on those who have been smart with their money.
Final thoughts
Today we shared a few financial tips for helping to get through a redundancy, which do make up a big part of losing a job. However, don’t disregard the non monetary factors either.
Redundancy can be hard on the whole household. Keep communication up with your loved ones and talk about what you are going through. Your household should be a team and you will need all the support you can get.
Try to remain as positive as possible but if you do need help, don’t be afraid to ask for it. Be open about your situation and you never know where new opportunities may come from. The situation you find yourself is only temporary so don’t forget that. You will look back on your life and hopefully see this period as just a blip.
If you are struggling with how to reorginse your finances, then I am always willing to lend an ear.
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here