The spectre of losing your job can be terrifying, especially when vacancies are at a record low. But once the initial shock has worn off, redundancy can herald a new beginning – a chance to set up your own business, use any pay-off to clear your debts or find a role that gives a better work/life balance. By following our expert money saving tips you can protect your finances today.
The more thought you put into your options, the better you’ll be prepared for the challenges and opportunities you could face. Here are some ideas that could help.
Don’t look back
This is an opportunity to change your life for the better. Imagine what you’d like to do and could realistically achieve, then plan how you can reach your goal. You might want to move abroad or have a hobby that could become a career – a number of people have used redundancy to reinvent themselves as gardeners, artists, electricians or teachers. Other people relish the chance to slow down, taking a part-time or less well-paid job in order to focus on a personal passion, such as charity work or sports coaching. Discuss your ideas with your family – it helps to have their support.
Know your rights
It’s worth taking advice – try your HR resource or union or visit Citizens Advice at www.adviceguide.org.uk. If you’re 22-41 and have worked for the same organisation for two years, you’re legally entitled to at least one week’s redundancy pay for every year you’ve been employed. Older workers get 1.5 weeks pay for every year worked over the age of 41, while younger people qualify for 0.5 week’s pay for each year worked under the age of 22. Tax exemptions may also apply to any lump sum you receive.
Take a good look at your finances
When you make a new start, you need to know your current position and manage your new financial circumstances. Dig out your household bills, bank and credit card statements and go through them carefully to find out where your money is currently going. Then take a look at and start managing your credit report – the personal history of your credit accounts, such as cards, loans and mortgages, along with your repayment record. It lets you see what you’ve borrowed and how you’re coping. You can start managing your Experian credit report free for 30 days with a trial of the online CreditExpert service.
There’s lots of free advice for people who want to change track and acquire new skills. The direct.gov site at http://tinyurl.com/nzawpe is a good place to start. The organisation that is making you redundant may also offer a support package, such as careers advice, CV-writing or counselling. Sign up for all the help you need.
… and sign on
If you don’t have a new job to go to, don’t forget to register at your local Department of Work and Pensions (DWP) or Jobcentre Plus for the Jobseekers Allowance, which will pay you £64.30 a week and ensure that your National Insurance contributions don’t lapse.
Cut your costs
It makes sense to save in advance – and before redundancy prevents you changing your credit deals – so go back to your credit report and prioritise the borrowings that are charging the highest interest. You could consider consolidating some debts into a single, less expensive loan or eventually use some of your redundancy payment to target them. In the meantime, look for zero per cent on balance transfers or new spending that could help to tide you over the early jobless months but remember to save or set aside the money you’ll need to repay. Visit price comparison websites to find the best deals on everything from utilities to insurance. It’s also worth searching out lifestyle websites such as http://talkmoneyblog.co.uk, which offer all kinds of money-saving tips.
Invest in your future
Setting up your own business or studying for a new qualification often means borrowing money, so it will pay you to invest some time in cleaning up your credit history and making sure it stays in good shape. This is important because lenders look at your credit report when you apply to them and your chances of getting the deals you want depend on demonstrating that you are a reliable borrower. So manager your credit report to ensure that it’s up to date and accurate, close unused credit accounts, register to vote at your current address and challenge any items you don’t recognise or believe are incorrect. It’s free to see your Experian credit report as often as you like during a trial of CreditExpert.
Don’t bury your head
The sooner you let people know what’s happened, the more quickly you’ll be able to move on. Friends and family can offer support if they know what’s going on. Lenders are the same get in touch with them and explain your situation – you’ll find a list of contact details in your credit report. They may be able to reschedule your repayments so they are more affordable or even give you a brief repayment holiday or interest freeze. If you miss any credit repayments, details will stay on your credit report for at least three years, which could make it hard for you to borrow when life returns to normal.
Remember that redundancy probably won’t happen to you. Unemployment is running at seven per cent. Even so, you’ll be better off and more able to pursue your dreams if you take control of your finances now and lay down plans for the future you’ve always wanted. And if the worst happens, you’ll have a strategy to follow.
Your thoughts, experiences and comments are welcome. You can join the discussion below and leave your thoughts and experiences.