Prepare yourself financially against sudden job loss

No matter whether you’re just starting off in your career, whether you’re older with financial responsibilities like kids and a mortgage or even if you’re in the latter stages of your career, facing a sudden job loss can be traumatic and could trigger a financial setback.

It’s important to plan and prepare in case you do lose your job or are made redundant. That way you can reduce the impact on your financial situation and look ahead to the future.

1. Set up an emergency fund

Planning for a job redundancy begins with building an emergency fund: a pot of money you've set aside that will tide you over if you lose your job.

The key if you're made redundant is being able to access this money readily. One option is to keep your emergency funds in a savings account. The idea is to put aside enough so you have at least six months of living expenses to cover everything from home loan repayments and bills to leisure.

2. Create a regular savings plan

It’s a good idea to establish a regular savings plan to help your emergency funds grow. Organise to have money automatically taken out of your pay and put into the fund. To further help your funds grow, consider holding them in a high-interest savings account that earns more than an everyday bank account, but still gives you similar access to your funds. Look into any fees and product features before opening a high-interest savings account.

3. The payout: know your rights

It's also important to understand how your redundancy payment will be calculated. There are rules around how much your employer has to pay you. The Fair Work Ombudsman, which enforces Australia’s workplace laws, has a calculator on its site you can use to work out how much you should receive.

4. Look to the future

Losing your job can be a shock. If you can, focus on the positives, including the benefits of any redundancy payouts you receive. A job loss is an opportunity to reassess and focus on what you really want in a new job. Spend some time thinking about your next job. That might mean taking time out to do further study.

Be prepared to move quickly if your job is made redundant. That means seeing recruiters immediately as well as tapping into your network and making sure your resume is up-to-date.

5. Access help when you need it

It’s important to let your financial institution know if you have been made redundant and you may need help working out your financial future. All banks have hardship teams that can assist you to get back on your feet again.

 

Next: Things to consider when you've been made redundant

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The information is current as at 30/09/2020.

Diana Saad is a representative of Westpac Banking Corporation ABN 33 007 457 141 AFSL & ACL 233714.

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs.

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