With the ongoing uncertainty in the global economy, many companies are being forced to cut costs, making redundancies more common. So what’s the best way to cope if you are made redundant and how can you keep on track with your financial goals?

Being made redundant can be a big blow to both your finances and self-esteem.

But, in today’s economy, many great employees are losing their jobs so it’s best to remain positive and not to take it personally. Remember, the sooner you come to terms with what has happened the better you’ll be able to turn your situation around. Dealing with any financial obstacles early on will dramatically improve your situation down the track. For many people, a redundancy can improve both their quality of life and financial situation. But it’s important to recognise that you need to have a plan.

Redundancy can often mean a significant payout. This could be used to cover living expenses while you find a new job, help you set up a new business, or for some people – particularly those in their 50s or 60s – could set you up for an early retirement. How you use this money is important, so think twice before spending it all on a long holiday or a new car.

Another important thing to consider is that redundancy packages are often more than just a severance payment and can include other benefits such as outplacement or counseling services and time off for job hunting.

If you’re unsure what you are entitled to, check your employment contract. Most awards and contracts set out employees’ redundancy entitlements – so that’s the first place you should look.

Unfortunately some people, including workers under the Workplace Relations Act, may not be entitled to a redundancy package. If you don’t receive a package, it may be a good idea to talk to Centrelink about registering for Newstart Allowance while you look for future work. Depending on your leave entitlements and liquid assets, you may not be eligible for benefits immediately, but knowing what you can expect later on will help you budget properly. Centrelink can also assist with employment opportunities and training.

Whether you receive a redundancy package or not, it’s a good idea to seek professional advice to help you plan for your future. Financial advisers are experts in dealing with these situations and can help you explore your options and opportunities thoroughly.

For those with a redundancy pay out, a financial adviser can help you determine what this money means for your financial future. If necessary, they can help you invest it to suit your financial goals, taking into account any possible tax concessions. Or alternatively, they could help you determine the feasibility of starting your own business or retiring early. Of course there are other options you could explore, such as transitioning to retirement – maybe by working part time – and drawing some income from your super, but it all depends on your personal situation.

For those who don’t receive a pay out, a financial adviser can help you with budgeting and debt management. Now that you are not receiving an income, you’ll need to establish a new budget, reassess any investments you have and work out strategies to manage your debt effectively. As a financial adviser, it’s our job to help you address these issues.

With the right planning a redundancy could improve your quality of life and give you that extra push to sort out your finances and reassess both your financial and career goals.

Of course everyone’s situation is different so it’s best to contact a financial adviser for personal advice based on your unique circumstances and objectives.

Need more information?

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