How to prepare for redundancy whether its thanks to a global pandemic or two or something worse!.
So, you have had the dreaded meeting or email. It’s finally happening you are being made redundant.
It’s not you; it’s us. We don’t need you anymore, sorry!
Receiving this news can be extremely frightening and stressful if the loss of this income is going to be a significant problem, especially if it’s going to be a major problem very soon.
Being made redundant may fill you with dread all with relief, either way, the loss of income in the short or medium-term might bring with it financial problems you could do without.
If you’re thinking
- I lost my job and have no money
- I lost my job, and I’m scared
Here are a few ideas on how to prepare for redundancy.
Know your redundancy rights. …time to read that HR Manual.
The first thing is to understand your redundancy rights.
What has your employer agreed to do if or when making people redundant? And what do they have to do by law?
- How much of a payout can you expect?
- How much notice do they need to give you?
- What consultation process do they need to take you through?
- Do you have leave days to take, or will they be added to the payout?
- Is there a union or staff forum that can answer your questions or support you?
ACAS ACAS (the Advisory, Conciliation and Arbitration Service) gives free advice on all employment issues.
Citizens Advice Your local bureau can give free employment advice
Money-saving expert also has a good section on redundancy
The more you know about your employer’s policies and procedures alongside what are the statuary requirements, the better you are to secure what you are entitled to.
Know your money intimately
Firstly, do you know your numbers? Do you know how much money is coming in and how much is going out? Because in a short while there may be no money coming in and only money going out.
Only money going out and none coming in is likely to be financially sub-optimal, to say the least. So you need to understand what is going on with your money before any alarm bells start ringing
some of the critical areas you need to know are
- What was your income?
- How much of your spending is essential?
- How much of your spending is discretional?
- What of your spending is now up for negotiation?
- What regular bills do you need to maintain to stay in your house and eat three meals a day?
- Are there any things coming up on the horizon that will require your money other than day to day expenses?
- What are your typical monthly living costs, essential, discretionary and luxury levels?
- How much savings do you have and how easy would it be for you to get your hands on it?
- How long do you think you can last before you are desperate for an income?
Gather all your paperwork from the dreaded drawer or shoebox of shame and put it into a file with dividers separating everything either by the bank, product or whatever way makes sense for you.
From this, you should be able to see what is going on with your money where the pinch points might be and if any immediate action is needed.
Reduce your outgoings
go through your bank and credit card statements or even better your money app statements and review all of your outgoings.
What are the bills that are essential, i.e. electricity, gas, rent or mortgage? When do they come out and when was the last time that you reviewed them?
You might find that you could make some quick cuts to your outgoings by reviewing some of your standard utility costs like broadband, electricity, gas or mobile phone bills. There are several comparison sites out there that will help you see if you are paying more than you need to.
The trick here is to make sure that you are on a good deal. You don’t have to get the best deal. Searching for the best deal on everything might take more time than it’s worth. Find a good deal and move on to the next money-saving exercise.
Could you haggle on your rent payments and ask for a reduced rate? If you don’t ask!
Track all your spending
Would you want someone in charge of your finances if they said: “I don’t know where it all goes?” So maybe it’s time to understand where your money is going.
On reviewing your spending is there anything that you think you could easily do without. If so, get rid of it.
Is there anything that you could cut down on and or do less of? Common things here are eating out, drinks after work (I guess you don’t have to worry about that for the time being) takeaway food and so on.
Is there anything that you could stop spending money on? Gym memberships, magazine or online subscriptions that you could at least pause if not stop altogether.
Could you change the way you spend money?
Could you use more cash, making each transaction more visible and possibly a little more painful than using plastic?
Could you shop at cheaper shops changing to supermarket or discount brands to save more money?
Are you able to suspend any small-medium or substantial purchases until you get another job? Taking your foot off the gas while your income goes down will play a significant role in reducing your stress around money at this time.
Go through each line of your spending and ask yourself
- Do I really need this now or can it wait?
- Can I afford it?
- Can I get it cheaper anywhere else?
- Will I use it?
You could use a money app like MoneyDashboard* to track all your spending in near real-time.
Who do you need to tell?
Do you need to tell anybody that you have been made redundant? Like banks or insurers, as they may be able to help you out or adjust any payments, you are already making.
Could you, should you, would you tell family and friends that you have been made redundant. They might be able to help in some way, especially if you had a specific ask. It will at least let them know that you are currently going through some potentially tricky changes.
Deal with debt
Debt is not great at the best of times, but these are now not the best of times.
It’s always a tricky one to consider having savings in the bank vs paying off debt. The savings in the bank are probably not earning much interest, but the debt likely is. Which one of these scenarios would help you sleep better at night? Little or no savings or little or no debt?
If you don’t have a debt plan, now is probably a good time to get one.
Could you pay off any of your debts right away?
And if you did what position would this leave you in?
Could you renegotiate the repayment process? You may be able to temporarily lower the payments. And what effect would this have on your level and amount of debt/payments in the long run?
Make sure that you are making the minimum payments on all your debts and then decide if going to work on the debts will help you in this situation.
You could use the debt snowball method paying off the smallest first and then going to the next biggest one and so on.
Or you could use the debt avalanche method paying off the highest interest rate once and going down the list that way.
Start saving money now
The more money you have, the more options you have. The more you have in liquid assets, i.e. those that you can get your hands on quickly like cash, the more financially resilient you will be and better able to weather most financial storms.
The way to create more savings is to grow the gap between your income and your expenditure, which can mean increasing your income and or reducing your outgoings.
If you are about to be made redundant, reducing your outgoings will help slow down the money flowing out of your accounts, helping you keep more of your money.
Save as much money as you can at the beginning of the month and then spend what’s left. This is a better way to build savings than to spend and then save. It’s a simple trick but helps with the phycology of money and saving.
Each month you can see if you can squeeze your expenditure down and down until you reach a point where you feel, naah that’s enough and it probably is.
And in the words of Marjorie Dawes doors from Little Britain if you save half your money, then you can spend twice as much next month!? (don’t do that)
Budgeting can help you to give every pound a job to do rather than just being spent with nothing left over at the end of the month.
Make yourself more employable
Always be sincere, even if you don’t mean it.
Harry S Truman
Could you volunteer for more work, take on the jobs no one else wants to do or generally be a happy face around the place?
Do the right people know all your skills and experience? Is there something you know how to do that could benefit the company you work for but have not yet used or shown to anyone?
Maybe that coding side hustle or website you work on could help your company out.
All or some of these things might help keep you a job if you are seen as a can-do type of person.
Even if it doesn’t, it will help with a reference or when they are rehiring.
Always try and leave a company with the door left open, unless you want to slam it in their faces on the way out for effect. It’s up to you to give it a bit of thought.
Update your CV and LinkedIn profiles
How is your LinkedIn profile looking if you have one? If you don’t, maybe its time to get one.
Update your skills and experience, link with friends and colleagues, ask for reviews from people and put up that you are looking for work.
Don’t just say what you did in jobs, also detail any significant accomplishments or projects that you worked on and your role in them.
Get a good photo up, not one from the last hen or stag do you went on. Make it look like you want a job and won’t be a danger in the workplace.
How’s the CV looking? Neat and tidy? 2 pages?
Yes, ideally you do need to craft a CV for each specific job but at least having a solid template to work from is always going to make it speedier for you to edit as necessary.
Remember someone is going to scan it very quickly when looking for the right candidate so make sure what they are looking for stands out on your CV – hint look for it in the advertisement and job description.
Keep a positive mindset
Initially, redundancy might feel like a disaster, but in the long term, it might be a blessing in disguise. Maybe it’s a chance to pivot into something else, something less boring instead, who knows.
If you can track your finances, manage your money and make a plan for recovering from the setback, it could help you keep a positive mindset. Seeing this as a temporary setback will help put it into perspective.
Here’s hoping that losing your job is not the end of the world and you can bounce back.
Conclusion: How to prepare for redundancy
We have covered a few things you can do after losing your job or in the run-up to it.
Know your redundancy rights: find out what you are entitled to and make sure you get it.
Reduce your outgoings:
Start saving money now: Start to build up your financial reserves to help you last out any period of unemployment. Cut your costs as best as you can.
Deal with debt: Now might be an excellent time to deal with your debt before it gets worse.
Make yourself more employable: Be the can-do person if not in this job it will help for the next one.
Get your CV and LinkedIn profile up to date and showing that you are ready for work.
Keep a positive mindset: Losing your job is not the end of the world and might be a chance to pivot to something better.
As a financial coach, I can help you to think about how to manage your money for a stress-free life and what your options for budgeting, saving, and investing might be.
Through this education and guidance process, you will be able to make informed choices for yourself and start taking action towards your Financially Happy life now before it becomes even more painful and expensive.
I won’t be recommending specific products or trying to sell any. If you need specific debt or product advice, then a financial advisor might be your best call.
Contact me here for a free chat about what options you might have for making money work for you.