How do I plan for a redundancy?

Lots of people will lose their job at one point in their lives. Regardless of whether a redundancy comes as a complete shock or with sufficient warning, it is often a very confronting and emotional process.

It can be difficult to think about a potential redundancy and to plan for the unexpected, but there are some steps you should take while you are in secure employment to be as best prepared as possible.

 

Look at your current finances

If you don’t have a budget already, prepare a baseline budget that you could live on if you had to look for new employment. Budget for essential expenses such as rent, mortgage, utilities, food, and petrol, and then monitor your actual spending.

Review your debts, and work out a repayment plan to clear them as quickly as possible such as credit card debt

 

Start of build on an emergency fund

Access to savings is crucial to provide a buffer and meet your cost of living until you can find new employment. Even if you can only save a little, make the start and keep saving. The more regular the saving the better. A good target to aim for is to have enough money in the bank to cover at least three months of expenses.

The savings could be directed to a separate high interest savings account. Or, if you have a mortgage, you could consider holding the funds in an offset account. Having a separate account means you will be less tempted to dip into it for everyday expenses.

 

Understand what you are entitled to

A redundancy is based on an employee’s continuous service with their employer. You may need to check your award or contract for any specific redundancy clauses regarding the process and payment (details of most awards available on Fair Work Commission website). If you don’t have any specific clause of redundancy, it will likely be calculated under the National Employment standards.

Be aware of what your notice period is, and what leave you have accrued and your long service leave entitlements.

 

Keep your skills up to date

Keep engaged with your current role and take advantage of any opportunities to maintain and build your skills. Networking is also key. Build your contacts with appropriate people inside and outside the business you work for, so you have connections to draw on when looking for a new role.

 

Get financial advice

Redundancy is an emotional time. Whether you think that a redundancy is around the corner or you’re contingency planning over the longer term, speaking to a financial adviser can be a smart choice. We will work with you to review your current financial situation and help you put a plan in place to boost your financial stability – so you can feel confident that you can weather any shocks.

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Author
Financial Planner AFP® | M.FF

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