If you have been made redundant, it’s important that you take steps to manage the financial and emotional impact.
Redundancy is difficult emotionally and financially at any time. But right now, with a tough employment market, it can feel like an even bigger blow.
Here’s what to do as soon as you hear you’ve been made redundant… After you call your support network, of course.
1. Plan and budget
It’s critical that you take a look at your expenses to find places where you can cut costs right now. It’s the first step we take with all our clients, and many are surprised at where costs can be cut with little or no lifestyle impact.
Things like cancelling subscription services that you don’t use, or even talking to your utilities provider or lender to get a better deal are easy ways to get started.
Setting a budget may feel like a tedious task, but it’s a critical one if you are going to protect your finances during this period of uncertainty. To start your planning, you can download Apt Wealth’s free budget planner here.
2. Explore all of the support options
From government stimulus packages to provider hardship clauses, there are many options out there that can help you right now. Accessing your super or pausing your mortgage repayments aren’t decisions to be made lightly, but they can be a lifeline for people who have lost their income. It’s worth exploring your options.
Your employer may also offer you access to support services to help you make the transition. From recruitment and training support to financial planning and advice, you should make use of whatever is on offer.
3. Take steps to maximise your payout
There are many ways you can put your redundancy payment to use, but it’s critical that you don’t make rash or ill-informed decisions. In our current job market, it may take a little longer to find your next role. So it’s worthwhile planning for how you can make the money last and make it work for you.
With such low interest rates right now, leaving money in the bank isn’t the best strategy for maximising your funds. Just remember that you need to have easy access to the funds to cover your living expenses for around six months.
If you have this in hand, then you can look at other tax-effective investment options, like superannuation. It’s worth also making sure that your super is structured to weather financial storms. That way you can make the most of your contribution and protect your future. If you are in a couple, equalising your partner’s super may also be a way to minimise your tax liability.
For those of you with debt, using any excess funds to pay this off might seem boring, but it is a winning strategy. It can help you minimise your costs of living today and get ahead tomorrow.
4. Discuss your redundancy timing with your employer
Depending on what time of year you’re being made redundant, it’s worth asking your employer whether they can make it effective from 1 July. This will put your redundancy payment into the next tax year and may reduce your tax liabilities, particularly if you don’t find another job straight away.
5. Try to see being made redundant as an opportunity
While it can be a very emotional time, it’s important to remember that employers all over the globe have had to make tough decisions right now. Being made redundant isn’t a reflection on your skills or your worth.
Many of us have dreamed of transitioning to a different career or studying something new. Your redundancy is an opportunity to explore that.
Reach out to recruiters to find out what skills employers are looking for in your current industry. Or if you want to change jobs or even industries, look for opportunities to transfer your current skills. There are many free online courses right now, even some offered by prestigious universities, so you can start learning without incurring costs. You may just find a career option you hadn’t previously considered.
Your future earning potential is one of your biggest assets, so using this time to maximise it can be a good financial decision. It can also help you focus on your next career move.
Financial uncertainty is common with redundancies, and this is exacerbated with the challenges of COVID. Seek expert personal financial advice to ease the burden and help you take and stay in control of your finances.
This is an edited version of an article that originally appeared on Apt Wealth Partners and is republished here with permission. This article contains general information only. This should not be relied on as independent finance or tax advice. If you are after specific professional advice, speak to your registered tax agent/financial advisor or reach out to Apt Wealth Partners.
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