Credit Cards & Loans
How to cope with an unexpected redundancy
Turn to the Money Advice Service
There is often a run-up to being made redundant, according to Jane Symonds of the Money Advice Service (MAS). Use this time to prepare. While you may feel panicked or depressed, the MAS website has a number of worksheets that will help you regain control of the situation.
Julie Hutchison of Standard Life says: “The Money Advice Service should really be your first port of call.”
The MAS website can help you plan by calculating your redundancy pay and helping you adjust your budget.
Discuss the future
Bring your partner into the loop. Decide how quickly you’ll need to get back into work, the minimum salary you’ll need and how you’ll handle childcare.
According to Hutchison you should also reconsider which partner is the main breadwinner. She explains: “If one partner has been staying at home, couples might have to reflect on which partner is in the best place to try and find work. It may be that the person who was once the breadwinner is in a difficult job market. Have a big conversation about who is in the best position to earn for the family. You’ve got to be flexible.”
Consider your losses
Pension contributions are common secondary losses, according to Hutchison, as are life insurance and medical insurance.
She says: “While you may need to cut your contributions in the short-term, don’t forget that you can restart your pension once you find employment. Keep an eye on that – make sure that this unexpected bad news doesn’t make you take your eye off the ball when it comes to your future.”
Get into a routine
However long you think it may take to find a job, Symonds says, double it.
She explains: “If you’re highly paid or in a niche industry it can be quite a while until you find another job. That can be quite demoralising. It’s easy to wallow but now is the time to maintain control. Spring clean your finances.”
To beat the blues, establish a routine wherein you spend the morning looking for new jobs and the afternoon improving yourself in some way. Write a cookbook, fix up the house or learn a new skill.
Symonds says: “That will give you purpose and you’ll have something that makes you stand out. You’ll be able to show an employer that you still have energy and drive.”
Use your lump sum wisely
Directly after your employment comes to an end, decide what to do with any lump sum you may have received. According to Symonds, it’s important to make sure that you have enough ready cash to last six months and have paid off as much debt as possible.
Whatever you do, don’t blow the cash on a holiday. Symonds says: “The emotional side is the one that usually gets people. You’re down in the dumps, you’ve got a lump sum in your pocket and you have too much time on your hands. Avoid overspending by setting up routines and keeping a spending diary.”
For tips on how to invest your lump sum click here.
Find a support system
If your employer has offered you any kind of career counselling or support, take it. Failing that, sign on at the Job Centre. This, Symonds says, was an important lesson from her own experience of redundancy.
She says: “It’s often worth signing on at the Job Centre even if you don’t need to rely on benefits, because your National Insurance is still paid and they can be a great source of support. I was surprised by how supportive my Job Centre was.”
Don’t ignore your emotions
Hutchison and Symonds urge people not ignore the emotional toll of a redundancy.
Hutchison says: “This will be a shock and may cause a response that means you’re not operating at your best. You may need to recognise that you may need to ask for help.”
If it’s your partner who has lost their job, try to remain calm and supportive, no matter how stressed you may be. Symonds says: “However you feel, they feel worse. They’ll be humilated, invalidated and very worried – the last thing they need is a problem with their parther.”