Redundancy: Why Financial Advice Matters

Coronavirus, economic downturns, working from home, the new normal…business is restructuring, and change is happening fast! Redundancy is on the increase and has become a part of the working landscape.

Economic reality or not, it’s a situation few people ever want to find themselves in – but in the current climate, it’s also one to prepare for…

The impact of the reaction is usually heightened due to being unprepared, feeling a loss of control, and being forced into an unstable and uncertain future. Common reactions are shock and disbelief accompanied by reactions of grief, including disbelief, anger, and feeling withdrawn.

The internet is flooded with advice on how to cope with redundancy, but one point that most sources agree on is that you should not isolate yourself.

Redundancy can hit hard, leaving people with a level of hurt, anger and vulnerability they didn’t anticipate – and often, that’s when people drop off the radar, feeling anything from impotent rage to acute anxiety – even shame. All normal reactions.

It’s when we’re at our lowest ebbs that we most need support – and the support is out there. Talk to friends, family… or someone professional. Don’t let pride get in your way. Contrary to what you may think, it takes real strength to reach out.

Ask for help. And help yourself by asking for it early.

Another point that all the experts agree on, is that you need a financial plan to see you through the immediate crisis of your redundancy, and to set you back on the road to achieving your financial goals.

Your financial plan can be complex, and includes considerations such as:

Take stock of your payouts and entitlements

Review your redundancy documentation, and check your entitlements from your employer and from places like Centrelink or Job Services Australia.

Don’t spend

The redundancy payout is in your bank. So, what next? A holiday? A new car? Home renovations? Perhaps not. Realistically, it may take several weeks, or months, to get another job, so it is time to use financial common sense and restraint.

Decide what to do with your redundancy payout

Although it might seem the right thing to do, dropping it straight into your mortgage or superannuation may not be the best course of action because you may need to access that money down the line. Simply leaving it in a savings account may not be wise either, as the money is not working for you, and may affect your eligibility for government support. You may need to consider options like getting rid of high interest debt first.

Make a budget that addresses your needs and cuts wants

It is important to analyse and understand your financial situation. A financial planner can give a fairly accurate pointer to show at what point you’ll have a cash flow issue and can then work around your budget and be realistic about what you can afford to spend.

Don’t cut your insurance payments

It may seem like a cruel joke to pay for things like income insurance when you are out of income, but it’s also not the time to cancel everything without due consideration. The last thing you want to do is cancel something you can’t get again (agreed value, terms etc.) that may become more important as you get older. You need to make sure you understand the implications before you act, and a financial adviser can help you make informed decisions.

Use your Super wisely

Depending on your age, it might also be possible to look into withdrawing money from your superannuation to start paying debts, or to pay for things such as insurances. Making informed decisions that take the details of your unique personal situation into consideration is vital.

Invest in yourself pro-actively

It may be beneficial to invest in yourself in the form of up-skilling to improve your chances of finding another job, or in self-care such as joining an exercise class to help you deal with stress, stay healthy and maximise your resilience. These decisions should be made objectively, with your budget in mind.

Making the right decisions early on can have an enormous positive impact on your outcomes following redundancy. Don’t go it alone – reach out to a financial adviser and empower yourself with the support to make informed and objective decisions. Soundbridge has a proud 40-year history of being there for our clients in their worst times of need, and our advisers are standing by to support you if you should choose to call on us – however whatever you do, please make the call!

Sources:

https://www.outplacementaustralia.com.au/redundancy-survival-strategy-part-1.html

https://www.upskilled.edu.au/skillstalk/how-to-cope-after-being-made-redundant

https://thenewdaily.com.au/finance/work/2014/02/27/10-point-plan-coping-redundancy/

https://www.fairwork.gov.au/ending-employment/redundancy

https://moneysmart.gov.au/losing-your-job

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Soundbridge Financial Services is an Authorise Representative of AFTA Pty Ltd ABN 18 624 984 550, an Australian Financial Services Licensee, Registered office at 166 Quay Street, Rockhampton QLD 4700 Any advice in this site is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.

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