Being made redundant can be scary and disheartening. While redundancy pay could cover your short-term finances, it’s natural to be worried about money when something unexpected happens.
While you may be focused on securing your next role, don’t neglect your finances. Taking control can put you in a better financial position and improve your mental wellbeing, which can have a positive effect on job hunting and other areas of your life.
Taking these six steps immediately could make your finances more secure.
1. Review your budget
Your first step should be to review the essential expenses you need to cover. How much do you need to cover things like your mortgage, utility bills, or grocery shopping?
Then, look at if there are any outgoings you could temporarily cut if you need to. Things like a gym membership or TV streaming service are nice to have, but getting rid of them could mean your savings stretch further.
Even if you don’t need to make cuts to your income now, it’s still worth reviewing your budget. It means you can be confident that, if you face financial difficulties in the future, you have options.
2. Assess your other sources of income
While you’re not receiving a salary, you may still have other sources of income that you can rely on.
For instance, do you have any financial protection that could pay out a lump sum or regular income in your circumstances? Or do you have assets that provide a passive income, such as investments or property?
These forms of income could help tide you over until you find a new position.
It is also worth checking if you’re entitled to any government support.
3. Check your emergency savings and other assets
As well as assets that provide an income, you may have some that you can deplete to cover your outgoings.
For example, you may have an emergency fund held in cash that you put away to help you overcome financial shocks. It can be difficult to deplete your savings after you’ve spent time building them up. But they could provide a vital financial buffer when you need it most.
4. Rein in your borrowing
It can be tempting to use credit cards or loans to cover your outgoings. However, it could make your situation more difficult later on. So, try to avoid increasing the amount of debt you have and explore other options first.
As your income has stopped, you may also find that borrowing could come with a higher interest rate than you expect.
5. Look for quick ways to boost your income
If you need a way to boost your income while searching for a new job, there may be options that are right for you.
The gig economy has grown in recent years and the rise of remote working means there are more options than ever before. Depending on your skills and experience, you could act as a consultant or take on freelance projects to give your income a boost.
6. Call your creditors
If you are going to struggle to meet financial commitments, don’t bury your head in the sand.
Your mortgage lender, for example, may agree to a repayment holiday that could ease the pressure on your budget now. Or your credit card provider could freeze interest if you can’t meet regular payments. Get in touch with creditors as soon as you can, rather than waiting until you’re in arrears.
Don’t forget to review your finances when you find a new role
When you secure a new position it can be a relief to be earning a regular income again. While it can ease some of the pressure, you should give your finances a review.
For example, if you’ve dipped into your emergency fund, how can you replenish it? Or if you paused adding to your investment portfolio, are you still on track to reach your goal?
A financial plan can help your finances recover and put you in a better position if you face a financial shock again.
If you want to review your finances or discuss ways you can build a financial safety net, please contact us.
Please note:
This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
