Advice & Clarity… For Life’s Curveballs – 18th August 2014
A redundancy can be a challenging time, but also a great opportunity to start something new.
Take action and get your finances under control.
Prepare for the next chapter with these 5 tips.
#1 Making the most of your money
You could consider depositing your redundancy payout into an online savings account or a cash management account. Here it can be potentially earning extra interest while you determine the best way to invest it.
#2 Watch your budget
It can take some time to find a new job so be sure to get a clear idea of how much you have in savings and make a plan as to how your finances will see you through to re-employment. Online budget tools can be very useful in helping you see what you spend and where you can cut back. Savings you make today can have a big impact in the future.
#3 Your mortgage and other debt
Consider whether you should or should not use your redundancy payment to pay off debts like your home loan. You may not know how long you may be out of work. Consider whether any potential payment into the mortgage, via an offset or redraw facility, could be drawn on at short notice and without penalty. If this isn’t an option and you’re unlikely to meet your mortgage commitments, contact your lender to discuss options such as delaying or restructuring your repayments, or extending your loan term. You should also check to see if you have any insurance policies in place that may assist you with your repayments.
Depending on the amount of redundancy payout you receive, you may also want to consider paying off any high interest credit cards you have as this may save you interest.
#4 Review your employee benefits
If you’ve enjoyed benefits like life insurance, super contributions or employee share schemes, you may have some decisions to make with these too. After you leave your employer your super can be affected in ways you may not have anticipated. You can lose some or all of your insurance cover, although you should check to see if insurance continuation options are available. You may lose your employer benefits, or discounted fees. You should check with your super fund for more information about how your superannuation benefits might be affected.
#5 External support
You may be entitled to income support from Centrelink, but waiting periods and asset and income tests may apply. Centrelink also offer other support services such as job search, resume? and training assistance. For further information, visit the Centrelink website.
In times of redundancy you may also want to consider seeking professional financial advice to help you make informed financial decisions and keep on track with your long-term financial goals. Redundancy can be a challenging period, from both a personal and financial perspective, but it could also be an opportunity for a new and fresh direction.