On the one hand you might feel you are embarking on a new exciting path, but on the other you might be sad to be leaving a role you liked and feel anxious about your financial security and career direction. No matter what, it's essential to take control of your money to make the most of the challenge and opportunity of a voluntary redundancy. Here are six simple steps to help you make the most of your redundancy pay.
Deciding what to do with your payout is crucial. But don't feel you need to make decisions immediately. First seek financial advice that's tailored to your situation and financial goals. Think through the best place to keep these funds. A high-interest savings account may be an option so you earn money while you’re considering your future.
Use a budget planner to work out how much you will need each week or month, and how long you can make the money last. Don’t forget to factor in any employment package extras like car allowances to which you may have been accustomed when you’re planning your budget.
You may wish to take the opportunity to use some of your money to pay down debt. If you have a redraw facility, putting some funds into your home loan might also make good financial sense. Seek financial advice about the right strategy for your circumstances.
Putting extra money into your super fund may be a tax-effective way to boost one of your most important investments. It could also help you to create a more comfortable retirement. But, depending on your age, adding to your super could mean you will be locking away these funds for some time. Speak to an expert about the best strategy for you.
Some people use their lump sum as a way of creating wealth. If this is right for you, consider how long you want to invest for, what you want to achieve and how much risk you are comfortable taking.
You might consider putting some money into an emergency fund to help with any unexpected costs. Also consider insurances that may be appropriate now and in the future.
There are many different paths when you take a voluntary redundancy and the right one will depend on your goals, age and other assets. Talk to a financial adviser about the different options you may be able to explore.
This information is current as at 19/08/2020.
BT - Part of Westpac Banking Corporation. This document provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied up on as such. This information does not constitute financial advice. It 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. Information in this blog that has been provided by third parties has not been independently verified and BTis not in any way responsible for such information.