If you’re one of the thousands who have been made redundant – either on a forced or voluntary basis – it can be hard to know what to do next.
Being made redundant can be shocking, unexpected and life changing. Losing your job can be one of the most dislocating and confronting experiences of your life, even when it’s an option you have actively chosen.
The good news is that, even though redundancy can be traumatic, it’s also a great opportunity for a new start.
It can be difficult to think clearly about anything, let alone your finances. However, taking a considered and clear approach with your finances and any redundancy payout can alleviate some of the pressure.
There are a few simple steps that anyone that has been made redundant should take in order to set themselves up for the next step. In this article and the next we’ll provide some tips to help smooth your transition.
1. Understand your entitlements
The first step is to find out your entitlements. Make sure you understand them and their taxation implications. It is critical that you quickly understand your financial situation so that you can plan for the future.
Find out if your workplace is offering out-placement services. If so, take advantage of them. These can include helping with your resume and giving you access to resources and information you’d otherwise have to find on your own from places like CentreLink or Job Services Australia.
2. Use your redundancy pay out wisely
If you have received a redundancy pay out from your employer then it is vital that you use this money wisely. The best thing you can do after you’ve been made redundant is to plan out the optimal way to use your payout before you start spending money.
Some people make the mistake of assuming that they will find a new job very quickly, when in fact you might be unemployed for longer than you expected.
Decisions to use the money to pay out the mortgage or buy a car or go on a vacation might seem like a good idea in the short term but may cause longer term difficulties.
It might be a good idea to talk to a financial adviser as soon as possible after being made redundant so that you can establish a plan for the future and make the most out of your available savings.
3. Establish a budget
One of the best things you can do is set yourself a budget. Determine which expenses you need to pay each week and then calculate how much money you will have leftover for food and entertainment.
While it can be a knee-jerk reaction to try to pay down your largest debt, it is important to secure your cash flow so that you can take the time you need to figure out what you want to do.
Waiting periods for settlement entitlement can also put the pressure on, so focusing on the day-to-day is a big part of getting through the tough times.
Since redundancy has so much emotion attached to it, people can overreact and make big decisions without really thinking them through.
Simple things can really help. Being clear about your financial situation, preparing a realistic budget and ensuring cash flow – just doing the basics right is a sound starting point.
We can help …
If you have been made redundant and are worried about the future, we can help. Why not get in touch with Gerry or Clae now? Call Lakeside on (02) 9899 4555
Information current as at 30 July 2015 - The advice is general in nature only and does not take into consideration your financial situation, goals or needs. Before making any investment decision you should consider the appropriateness of the information to your circumstances and obtain a copy and read the Product Disclosure Statement. Please seek expert advice prior to acting on this information.