A Redundancy Survival Guide for Australians
If you’re among the thousands of people experiencing redundancy due to COVID-19, these tried and tested tips will help you get back on your feet. Many people will experience redundancy at some point in their working lives, but COVID has seen millions around the world lose their jobs and livelihoods. Don’t give up if you are one of them! You can recover financially and emotionally with this five-step plan:
1) Adapt to your new reality
A household budget isn’t fixed — you can and should update it whenever your circumstances change.
Devise three spending plans based on where you are at — the basic essentials, the nice to haves and the dream. Then explore ways to adapt it post redundancy.
Take your living arrangements, for instance:
- Should you temporarily move back in with your parents?
- Can you offset some costs — such as subletting a room?
- Do you need a big house with a big mortgage? If so, can it be refinanced or have the interest rate reduced?
2) Find temporary income
Redundancy is an excellent example of why an emergency fund is so important. If you’ve diligently put cash aside over the years, you now have a fallback option.
If not, explore other options for accessing cash:
- Investments: Can you withdraw equity or sell them for a strong price?
- Centrelink: Many JobSeeker eligibility restrictions have been waived during COVID.
- Insurances: Can you claim for involuntary redundancy on your income protection insurance?
- Family Tax Benefits A and B: You may now be eligible even if you weren’t previously.
- Superannuation: Should you diversify your investments to make it easier to withdraw if needed? Also, consider where a withdrawal should come from to minimise lost earnings.
- Side hustles: They could even become a lucrative new career!
3) Avoid adding to the pain
Don’t make a difficult situation even harder by making mistakes or acting on a whim.
Consider what happens to insurances when you’re made redundant — including those paid for by superannuation. Do you need minimum balances or active contributions to remain covered?
If you withdraw from your super, replace it once you’re earning again. A $10,000 withdrawal now could lose you as much as $200,000 by the time you retire. Catch-up contributions will also help your super balance recover.
And avoid the temptation to rack up debts on credit cards and store credit. The interest quickly adds up, even more so if you remain out of work for an extended period and can’t meet the repayments!
4) Invest in yourself
You’ll probably want to start job hunting immediately but invest some time initially to maximise your chances of success.
Take a good look at your CV. You may not have seen it for years, so update the details, give it a fresh modern design and add your most recent job and achievements.
Next, consider your qualifications and training. Can you make yourself more employable while you’re job hunting? Some courses have been discounted or even fully subsidised for COVID-affected workers.
Up-to-date qualifications are especially desirable for employers. Plus, up-skilling may even mean you can command a higher salary in a new job!
5) Manage your health
It’s important to acknowledge the emotional and mental effects of redundancy — anger, worry, loss of control, grief. These are normal responses and you’re not alone in feeling them.
Then take steps to stay healthy and positive, such as:
- Doing a project: Tackle those jobs around the house you’ve never had time for. You may even employ a tradie who really needs the income.
- Learning something new: A professional skill (as previously outlined) or something fun. YouTube how-to videos are a freebie resource!
- Resting: Use the time to recover if you’ve been stressed or overworked.
- Staying connected: Don’t become isolated. Stay connected with family and friends. Offer mutual support to fellow colleagues made redundant.
- Exercising: Enjoy some fresh air, particularly before the oppressive summer heat returns.
- Avoiding the news: There’s so much bad news amidst the pandemic, so limit how much news you read and watch.
Helen Baker — HTM Guest Contributor
Helen Baker is a licensed Australian financial adviser and author of two books: On Your Own Two Feet — Steady Steps to Women’s Financial Independence and On Your Own Two Feet Divorce — Your Survive and Thrive Financial Guide. Proceeds from the books’ sales are donated to charities supporting disadvantaged women. Helen is among the 1% of financial planners who hold a master’s degree in the field. Find out more at www.onyourowntwofeet.com.au.
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The information on this blog and website is of a general and educational nature only. It does not account for your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision, as we are not an advisory service. We recommend you consult a licensed financial adviser to assist you. The information is based on assumptions or market conditions which can change without notice, and this will impact the accuracy of the information provided. This website and blog occasionally provide links to third-party sites, aimed at helping you gather the information required to make an informed decision — we may receive payment for these referrals.