Things to consider when you've been made redundant

In times of redundancy, it's important to take a few steps to help get your finances under control so you can protect the lifestyle you've worked hard to achieve for you and your loved ones. Depending on the size of your redundancy payout and your current savings, you may want to consider ways of reducing your spending to help see you through.

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 earn extra interest while you determine what to do with your redundancy payment.

Watch your budget

It may 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.

Your mortgage and other debt

Consider whether you should or should not use your redundancy payment to pay off debts like your home loan, personal loans or credit cards. You may not know how long you may be out of work. You may want to consider paying off those debts with higher interest rates first such as any high interest credit cards you have.

Managing mortgage repayments

Keeping up your monthly mortgage repayments can be difficult when you’ve lost your income. If you’re ahead with your loan you may be able to take a small break from repayments. If you’re unlikely to meet your mortgage commitments or are concerned you may be out of work for some time, contact your lender to discuss options such as delaying or restructuring your repayments, extending your loan term or using your redundancy payment in an mortgage offset account.

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:

  • In some cases, you may lose some or all of your insurance cover when you leave employment, although you should check to see if insurance continuation options are available to you.

  • Depending on your insurance arrangements, you may not be able to claim against your salary continuance/income protection or TPD policy if you are injured or ill while you are out of work.

  • You may lose your employer benefits, or discounted fees.

  • Your super contributions from your employer cease.

You should check with your super fund for more information about how your superannuation benefits might be affected.

Seek professional financial advice

You may also want to consider seeking financial advice to help you make informed financial decisions in times of redundancy so you can continue to reach for your long-term financial goals. Get moving by arranging an obligation free complimentary consultation with a financial adviser.

Next: Prepare yourself financially against sudden job loss

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This information is current as at 19/03/2015.

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.