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Steps to financially survive losing your job.
Team Maddern
04/Nov/2015

Losing your job isn’t just about your career. It can have a far reaching effect on your bank balance, your health and your self esteem.

There are so many considerations and thoughts that will be running through your head at this time. It is therefore imperative to compartmentalise each aspect and break down the future piece-by-piece.

Your health comes first

Comprehensive research over several decades has continuously re-affirmed that losing your job unexpectedly increases the risk of health problems like depression and anxiety. It is an extremely stressful time and can manifest itself in sleep problems, feelings of overwhelm/ anxiety or behavioral issues that you may not have previously experienced before the job loss such as; anger, mood swings or a dependence on drugs or alcohol. If you experience any of these issues, it’s very important that you speak to friends, family or a medical professional as things can spiral out of control very quickly.

Understand your financial position

Now is not the time to bury your head in the sand. If we know the financial position that we are in, we are in a much better place to deal with incoming payments and outgoing expenses. Review the amount you have in savings and consider what your costs are going to be for the next 6 months – list these somewhere you can see them clearly, and try to gauge whether you have sufficient in savings to cover all of these expenses.

Ensure that you include all possible expenses in your list, we would suggest even using a budget planner such as those found as standard templates in Microsoft excel. Its best to assume that you will be without any incoming income for at least a month, any shorter period than this will then be bonus income. Alternatively, an independent financial adviser can help you put together a budget and provide advice on how to structure this.

Cull your overheads

If you lose your job and don’t have a guaranteed future income, now is the time to do a complete re-work on your life overheads. Changing your spending habits immediately can and will make a difference to both your bank balance and your stress levels. It will obviously be painful, but any cutbacks are usually just temporary and are for the greater good of your future, so making them straight away should reap immediate rewards.

We would suggest considering:

  • Postponing any holidays that aren’t already paid for.
  • Pause eating out and buying daily coffees unless absolutely essential such as for a birthday or someone else’s celebration.
  • If you drink or smoke, now is the ideal time to either give up cold turkey or cut back substantially. This will also help with your health and anxiety (and what’s better than that?)
  • If you need to make a major purchase, use your spare time to shop around and get the absolute best deal.
  • Don’t be tempted to use your credit card unless absolutely necessary. You should only use this a last resort if all your savings are exhausted, because you simply don’t know if or when you may need to use your credit if you aren’t able to find a job quickly.

 Check if your Income Protection or Bank loan insurance covers redundancy

Some Income Protection policies offered by banks and credit unions do have a small component built in for a redundancy or unemployment benefit. This means they may offer a small payment for a short period of time to cover your mortgage or other fixed expenses. These policies are infrequently offered and shouldn’t be relied upon as a source of income, but when they are offered the benefits can be useful to relieve stress.

Make sure you receive all of your entitlements (including your super)

When you lose your job, in most cases you will be entitled to some sort of benefit payment based on the business size, your service history, salary or the Enterprise Bargaining Agreement or Award for your industry or occupation. Your employer should provide you with details as to how they came to the payout figure. You can double check this calculation with your Accountant, your Union or Fairwork Australia if you are unsure.

It’s also important to ensure that any final superannuation is paid out. This may not be paid until the required ATO lodgement date, so keep your eye on your superannuation balance for payment and if all else fails, check with your payroll.

Some employers also provide a ‘financial planning benefit’ as part of their redundancy payments, where they will cover all or part of the cost of a financial adviser completing personalised advice.  You should check whether this is provided.

Centrelink Unemployment benefits

Various Centrelink/Department of Human Services payments exist for people who have been made unemployed. Some of these benefits have waiting periods that you will need to qualify for as well as income and assets tests; where your overall financial situation is assessed. It is important never to assume that you will qualify for a benefit payment upon unemployment, as often your savings will need to be significantly depleted before a payment can be made.

You can speak to an independent financial adviser or the Department of Human Services in order to find out what benefits you may be entitled to receive.

Consider talking to your bank

If things start to become difficult, you may wish to consider approaching your bank to find out whether you have any options with regards to your financial commitments such as home or car loans. Most banks do have options for times of financial difficulty, and may be willing to negotiate payment arrangements. Once again, this should not be relied upon as a given however if it is available it is certainly an option to consider.

Where to from here?

Sometimes professional advice is all that you need to remove a great weight from your shoulders. We offer a complimentary meeting with one of our highly qualified financial advisers to anyone who has recently been made redundant. Feel free to phone our office on (03) 9999 7200 or contact us here to arrange an appointment.

Disclaimer: The information on this site is of a general nature only. It does not take your specific needs or circumstances into consideration. You should look at your own personal situation and requirements before making any financial decisions or consult the advice of an accountant or financial adviser.