Written by: Cally Worden
Redundancy leaves many scars in its wake; often the most pressing issue is how to cope with the sudden loss of income. Fear and panic can easily set in, as the implications of losing a precious salary overnight start to sink in. It’s vital not to allow your worries to cloud your judgement – keep a clear head and make it your mission to be proactive.
There are solutions out there to help you cope, while you polish your CV and set about the business of job-hunting. Take time to explore all your options, seize any assistance available to you with both hands. Avoid burying your head in the sand – the sooner you take control of the reality of your new financial situation, the stronger your position will be.
Depending on your employment contract, salary, and years of service, you may qualify for a redundancy settlement. Working out the best way to use this cash can be difficult – the temptation is to hold on to it and use it to see you through your (hopefully) temporary shortfall in earnings. But most redundancy payouts won’t stretch all that far, it may be worth looking at investment opportunities with a financial advisor.
Depending on your overall household circumstances, your redundancy may make you eligible for certain benefits. Examples include: Job Seeker’s Allowance, Housing Benefit, a reduction in Council Tax and free school meals. Be aware though, if you are no longer working, any Working Tax Credit you were receiving will likely be stopped, but you may be eligible for an increase in Child Tax Credit.
Being made redundant does not, unfortunately, freeze your debts. The rent, mortgage, credit cards, and any loans will still need paying. Check to see if you have any payment protection insurance that may cover you payments, in the event of redundancy. And be sure to contact your landlord or mortgage provider as soon as possible to inform them of your change of circumstances – in many instances, it is possible to negotiate a temporary reduction in payments, or even a payment holiday. It is always best to be open about any financial difficulties.
Whatever your monthly expenses were before redundancy, they will need to reduce at least until you find new employment. Benefits and loan payment reductions will not be sufficient to cover the shortfall between your outgoings and your new (lack of) income. So it’s time for some belt-tightening. Take a long, hard look at your finances and remove any unnecessary expenditure. The only things left on your list of outgoings should be the true essentials – such as mortgage, energy bills, communications (although now may not be the time for a costly mobile contract), food, clothing and travel. Ditch any expense that isn’t absolutely necessary. You may be surprised how far your reduced income can stretch.
The idea of spending money on career development may seem nutty when you have just lost a primary source of income. But polishing your skills and expanding your CV may be just what’s needed, helping you to secure a new role. Be sure to discuss your options with your local Job Centre, as training in certain core skills is often available free of charge.