Sometimes a redundancy, though a stressful and uncertain time, can be a blessing in disguise. A chance to try something new, go back to study or give you the push you've always wanted to go after a different job. However, before the positive changes start rolling in, there's the initial nerve-wracking period to navigate.
We've pulled together five tips to help provide some direction for you during this tough time.
1. Put your redundancy payment into a savings account
Although it might be tempting to run off into the sunset with any redundancy payment you may receive, the best thing you can do is remove any temptation to spend it by putting the money into an online savings account with no debit card access. While you'll still be able to access your money by transferring it, you won't be lured into spending it on everyday expenses if you don't have any card access.
2. Review and limit your spending
This is a very important second step to take. Work out what you're going to need to spend (home loan, credit cards, everyday expenses, health insurance etc) over the next two months. Then check whether you have enough in your savings account to cover this. If not, transfer the shortfall from your redundancy payment into your savings account so you know you're set up for affording life while you look at new opportunities.
As part of this review, take a moment to question each expense. Do you really need that music subscription and streaming TV service right now? Do you really need to head out for that dinner next week? Also, happily consider that some costs will be less during this period. It's likely you'll spend less on commuting, takeaway lunches, coffees and after-work drinks. You may also be eligible for leniency on loan and credit card repayments too (see #3 below).
3. Call your bank and let them know of your change in circumstances
It may seem counterintuitive to call someone you owe money to and tell them you might struggle to repay them soon, however it's one of the best things you can do. The credit laws in Australia hold financial institutions accountable to offer support to anyone experiencing financial hardship.
ASIC's MoneySmart website defines financial hardship as “a situation where a customer is finding it hard to meet their loan repayments (for example, because of illness, unemployment or changed financial circumstances). The customer can then apply to their lender for a 'hardship variation' which changes the terms of their loan for a temporary period while the customer gets back on their feet”.
When being assessed for a hardship variation, your bank or financial institution is obliged to assess each request for financial hardship assistance and this is done on a case-by-case basis. If they can provide you with assistance (potentially deferring required payments or putting in place other strategies with you), you'll hopefully be able to get back on your feet faster.
Another institution to call is your superannuation fund. Depending on your circumstances, fund inclusions and related insurances, you may be entitled to some assistance.
4. Update your CV and set aside time each day to job search (or start learning!)
Once you're feeling a little more certain about your financial situation, update your CV and set aside time each day to look for a new job. Or, if now's the right time to complete further education, research courses and line up your enrolment. There are plenty of great job listing websites and a multitude of services available to help you update your CV, find the right course or help you apply for the right roles.
You'll be amazed at how much less stressful the job search process can be once you've completed steps #1-3 and know you're okay financially for the next two months.
5. Talk to someone
Even with the best planning, this can still be a stressful time. Looking after yourself can be the key to helping you navigate these bumpy waters. There are loads of great services out there to help – including free financial counselling and mental health support services (we're a big fan of Beyond Blue). You can also see your GP to organise a Medicare-subsidised visit to a psychologist under the government's Mental Health Plan. Although not usually ideal, redundancy can lead to many great opportunities and hope these recommendations go some way to helping alleviate the stress and doubt during this time.
If you've recently experienced a redundancy or are currently experiencing financial hardship, we encourage you to get in touch with us on 1300 747 747.
