If you’ve been made redundant, it’s important to take action so you can protect the lifestyle you’ve worked hard to achieve. Depending on the size of your redundancy payout and your current savings, you may want to reduce your spending to help see you through until you secure another position.
Making the most of your money
You could consider depositing your redundancy payout into an online savings account to give you the potential to earn extra interest while you determine what to do with your redundancy payment in the long term. If you have a home loan, you may also consider placing the redundancy payout in your mortgage offset account to reduce the ongoing interest cost on your loan.
Watch your budget
It may take some time to find a new job, therefore, it is a good idea to plan how your finances will see you through to re-employment. Online budgeting tools can be very useful in helping you understand what you spend and can help to identify areas where you can cut back.
Some people use part of their redundancy payment to pay off debts like their personal loans, car loans or credit cards. If you do put some money towards your debts, you may want to pay off those with higher interest rates first such as credit cards. Paying off these high interest accruing debts will assist with your ongoing cash flows.
Managing mortgage repayments
Keeping up your mortgage repayments when you’ve lost your income is often a priority. Contact your lender to talk through your options if you’re concerned that you may be out of work for some time and are worried about paying your mortgage. Delaying or restructuring your repayments, extending your loan term or switching to an interest only loan may be options to help you manage your financial situation through this period.
Review your employee benefits
You may need to make decisions about your life insurance and super contributions. Your super may be affected in ways you may not have anticipated after you leave your employer:
- You may lose some or all of your insurance cover when you are made redundant. So, check to see if insurance continuation options are available if it looks like you’ll lose your cover when you leave your current role.
- You may not be able to claim against your salary continuance, income protection or Total and Permanent Disability (TPD) policy if you are injured or ill while you’re out of work. If you’re made redundant, check with your insurer to find out how your policy is affected.
- You may lose your employee benefits or any fee discounts.
- Your super contributions from your employer will cease.
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.
Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.