We often say to clients that change is the only guarantee in life. Many people over the last few years have experienced redundancy from their employment. While sometimes this can result in a positive outcome with a new beginning the process and emotional impact can often be unsettling. Personally I have experienced this process and it was the reason my business was created, I often say to people it was the kick start I needed to really start doing what I wanted! However being prepared and having a plan in place for this major life and financial transition is really important.
Preparation is key
Much of the stress during a redundancy is caused by fear of the unknown, being unprepared or simply the speedy time frame that these can sometimes happen in. As a long term plan we suggested that you put aside a portion of your salary into a ‘rainy day’ account to take the financial stress out of the situation, ultimately at any time you should have around six months of expenses in this type of account.
An understanding of your financial commitments and cash flow requirements to fund your lifestyle will assist you in planning your finances until you find new work.
Maintaining your mortgage and debt obligations
Many people going through redundancy will be faced with the stress of working out how to maintain their lifestyle until they find a new job. Front-of-mind of course is how you will keep up with mortgage repayments on your home. If you’re ahead with your repayments, you may be able to claw-back via a redraw facility – where this isn’t the case, it’s a good idea to speak to your lender to try and work out a solution before they start calling you.
Under the National Credit Code, you may be able to request a delay, restructure of repayments or an extension of the loan term. Any of these options could result in additional fees and/or a longer loan duration, however if you’re in ‘financial survival mode’ this is probably a secondary concern overall. Interest only repayments can also be a good short term fix to free up cash flow while you find your feet again.
Help is out there
If you’re faced with redundancy good advice can assist you in exploring all the options you have both financially and in life. Centrelink benefits may also be available depending on your situation, if you are aged between 16 and 21, you may be eligible to access Youth Allowance to bridge the gap. If you’re 22 or over (and still below age pension age) you could discuss your eligibility for Newstart Allowance, although this is subject to income and assets tests.
Be aware that your redundancy payout may include a component of annual leave, sick leave or long-service leave – this may delay the date at which you start receiving your benefits, so it’s important to take this into account in your budget.
If you are a member of one of the Federal Government Defined Benefit schemes there are also options with regards to commencement of your pension benefits. This needs to be looked at in the context of where you are at in life, if you will rejoin the public service down the track and what your plans for the future will be.
Our Top tips for surviving redundancy
Recognise the emotional impacts
There may be a grieving process during this life transition (this is very normal). Take your time, be easy on yourself and seek outside assistance if needed.
Avoid making hasty decisions
Big decisions about how you’ll use your redundancy payment should be properly explored, especially if you are experiencing emotional distress. – financial advice can help you to make the best decisions for your particular circumstances.
Take advantage of what your company has on offer
Most companies offer payments for financial advice services, redeployment, resume writing and/or employee assistance programs.
People look to work with people who are positive and on top of things. Don’t think about how you can take revenge, or blame the individuals who have had to deliver the bad news. As one door closes another often opens. This maybe an opportunity to explore a new business idea or think about your values and find an organisation or work that is more directly tied to these.
There are different ins and outs with regards to redundancy, understand your entitlements, talk to your HR Team, Super Scheme and get the right advice.
Get in touch with people in your industry and put your feelers out and make some contacts at different recruitment firms – develop a list of contacts and focus on your transferable skills.
If you need assistance with exploring your options further talk to a professional.
Scott Malcolm (email@example.com) is Director of Money Mechanics (ph: 6257 5557) a fee for service advice firm who are authorised to provide financial advice through PATRON Financial Advice AFSL 307379.
The information provided on this article is of a general nature only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information you should consider its appropriateness having regard to your own objectives, financial situation and needs.