You get into work tomorrow and you are told that your position has been made redundant. Are you prepared for this scenario and its likely impacts on your financial security?
In these volatile times with company profits on the way down, layoffs being announced every other day and a general economic malaise you need to be prepared for adverse circumstances such as losing your job. Whether you are in a dual income or single income household, you need to have contingency plans in place if your one or more of your main sources of income goes away. Here are four key items to plan ahead for.
1. Get your financial house in order
Emergency Fund - have at least four to six months of living costs close at hand to whether the drop in your household income. If you don't have that kind of cash available keep other accessible sources like your home-equity line of credit untapped. It's a lifeline if you ever need it, and it costs nothing if you already have a mortgage. Pay-off any credit-card debt - normally the most expensive - if possible ahead of time while you have an income.
Here's one tip that a number of others will think is crazy -get more credit cards while you have a job - but don't use them! It is always much easier to get approved for credit cards when you have a job and income. The credit cards would then provide a last resort source of funds. Again I repeat, they are to be your last option, but they could give you some valuable breathing space before you get the next job.
Start keeping a budget so you know what you are spending money on, and where you can realistically afford to cut back. To state the obvious, now is not the time to make nonessential big-ticket purchases or taking that family holiday. Having a budget can provide you key information like how long you can manage with the funds you have and what mandatory/discretionary expenses you need to make allowances for.
2. Update your Resume & Networks - Make sure you keep your resume and networks up-to date. In times like these, using your networks to find new jobs is key. 70% of jobs are not advertised so knowing the right contacts in the industry you are in or want to move to is critical. If you have not been keeping up with your networks, start asap. You can also used social media sites like Linkedin for maintaining and extending your professional networks. Don't wait until you lose your job to start networking. This should be an ongoing thing and if you know you are going to potentially lose your job then start the search for a new job well in advance. Not only will you be in a stronger negotiating position, you will give yourself some time to evaluate options. Remember the benefit of networking is based on the old adage - It is not what you know, it is who you know.
Some people have also used losing a job as an opportunity to start their own business or to change career tracks. This is may be great for some people, but remember to have your financial house in order before you do this.
3. Family Plan & Support - Be prepared ahead of time. If you are in a job, discuss or think about how you would manage without one. If you have a family, make sure everyone is involved in these discussions because if the worst happens, then everyone will be impacted directly or indirectly. Family can be your best form of support and talking about these issues ahead of time will reduce the stress on relationships when/if times get tough.
4. Know your rights - If you are expecting a lay off or retrenchment, make sure you know what you should be entitled to. Know if and when you will have access to any unemployment benefits. In the US, most people's medical benefits are tied to their jobs, so understand your coverage costs under the COBRA policies (it's in those documents we get when we get hired, but never read). Review your employment contract for relevant termination clauses, notice periods and what payouts (like long service leave) you could be entitled to. Administratively, get direct phone numbers and names of people in your HR, Payroll and benefits department as you may need to contact them after you have left the company and getting to them via your company switchboard/operator can be very difficult.
I currently work in the financial sector and with the turmoil and mass layoffs across a number of companies, I have to be prepared. Even if you are in a relatively safe job, it makes sense to take some of the above steps because there could be other unforeseen circumstances that result in a job loss or big drop in income that you need to be able to manage.
Feel free to comment and suggest any other tips on this topic.
Emergency Fund - have at least four to six months of living costs close at hand to whether the drop in your household income. If you don't have that kind of cash available keep other accessible sources like your home-equity line of credit untapped. It's a lifeline if you ever need it, and it costs nothing if you already have a mortgage. Pay-off any credit-card debt - normally the most expensive - if possible ahead of time while you have an income.
Here's one tip that a number of others will think is crazy -get more credit cards while you have a job - but don't use them! It is always much easier to get approved for credit cards when you have a job and income. The credit cards would then provide a last resort source of funds. Again I repeat, they are to be your last option, but they could give you some valuable breathing space before you get the next job.
Start keeping a budget so you know what you are spending money on, and where you can realistically afford to cut back. To state the obvious, now is not the time to make nonessential big-ticket purchases or taking that family holiday. Having a budget can provide you key information like how long you can manage with the funds you have and what mandatory/discretionary expenses you need to make allowances for.
2. Update your Resume & Networks - Make sure you keep your resume and networks up-to date. In times like these, using your networks to find new jobs is key. 70% of jobs are not advertised so knowing the right contacts in the industry you are in or want to move to is critical. If you have not been keeping up with your networks, start asap. You can also used social media sites like Linkedin for maintaining and extending your professional networks. Don't wait until you lose your job to start networking. This should be an ongoing thing and if you know you are going to potentially lose your job then start the search for a new job well in advance. Not only will you be in a stronger negotiating position, you will give yourself some time to evaluate options. Remember the benefit of networking is based on the old adage - It is not what you know, it is who you know.
Some people have also used losing a job as an opportunity to start their own business or to change career tracks. This is may be great for some people, but remember to have your financial house in order before you do this.
3. Family Plan & Support - Be prepared ahead of time. If you are in a job, discuss or think about how you would manage without one. If you have a family, make sure everyone is involved in these discussions because if the worst happens, then everyone will be impacted directly or indirectly. Family can be your best form of support and talking about these issues ahead of time will reduce the stress on relationships when/if times get tough.
4. Know your rights - If you are expecting a lay off or retrenchment, make sure you know what you should be entitled to. Know if and when you will have access to any unemployment benefits. In the US, most people's medical benefits are tied to their jobs, so understand your coverage costs under the COBRA policies (it's in those documents we get when we get hired, but never read). Review your employment contract for relevant termination clauses, notice periods and what payouts (like long service leave) you could be entitled to. Administratively, get direct phone numbers and names of people in your HR, Payroll and benefits department as you may need to contact them after you have left the company and getting to them via your company switchboard/operator can be very difficult.
I currently work in the financial sector and with the turmoil and mass layoffs across a number of companies, I have to be prepared. Even if you are in a relatively safe job, it makes sense to take some of the above steps because there could be other unforeseen circumstances that result in a job loss or big drop in income that you need to be able to manage.
Feel free to comment and suggest any other tips on this topic.
@ Amazon
5 COMMENTS:
I would make two recommendations that people often do not do to protect their future.
Sometimes getting the 4-6 months of living expenses is hard to do especially when you are starting out. So my advice - use payroll deduction - and let the money go into a separate account that is not your regular checking account that you operate for day-to - day activities. This enforced saving is compulsory to get that nest egg in place - and once that is full, then start funding the retirement plan
The second piece of advice - start retraining yourself - not in terms of your career but in terms of getting more skills. These will make you a more valuable person and sometimes good enough to leverage to another job. In a fluid economy, these extra skills will also open more doors.
Keep up the good work and have fun !
GB
Some good advice there. I would also add that if you do lose your job, do NOT burn your bridges with your ex-colleagues. Firstly, it is not going to get your job back, and secondly, they form part of your network for industry connections, and perhaps, future work, and thirdly, it is negative energy that doesn't really achieve anything.
One thing I would advise is to take advantage of any offers of redudancy counselling that are available. It may be offered directly or you may be entitled to it through the Employee Assistance Scheme.
I've done this type of work and unfortunately many people think it's 'just talking' to someone about what happened which couldn't be further from the truth!
It does allow for general counselling but it focuses on helping people work out spcifically what they need to do to move forward. It includes helping people get their next job, setting up job seeking plans, often negotiationg with new employers and doing resumes, interview preparation etc.
Often the people providing this service have a lot of specialised knowledge about careers and job seeking.They are aware of retraining opportunities, subsidies and other financial benefits that you may not otherwise find out about.
Take advantage of what is offered and ask for it if it is not. It often also covers spouses and children who may be adversly affected by job loss.
Thanks everyone for your excellent comments. All the tips suggested are great and definetly applicable to this situation.
GB - I espically like the retraining advice. Also good to be multi-skilled in this economy.
tehnyit - When I had my first redunancy my reaction was exactly that of taking it all too personally. But after a few years of work you realize the world is a small place and you run into the same people, so your advice to maintain connections is spot on.
Louise - Good advice as well and you are right, many people overlook redunancy help/counselling that companies provide. I have used career outplacement firms before (organized by the company) and the people they have can definetly point you in the right direction.
I also likeed your recent post, which could be helpful when applying for a job. The whole series is useful.
http://www.eliminate-my-debt.blogspot.com/2008/03/sussessful-job-applications-finding.html
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ur site is very usefull.
me also create a page on 350.
plz see it.
thnx
http://www.personal-loan-for-tenant.350.com
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