Redundancy can be stressful at any time. With the contracted job market and uncertainty brought on by COVID-19, this stress is likely to be compounded even further and you may be feeling quite powerless.
It’s easy to feel that it’s all just too hard and escape with the latest Netflix series. But please know that you’re not alone and there are things you can do to feel more in control of your situation. Below are some ideas to help you feel calmer, stronger and more in control of the future.
Look for the hidden message
Redundancy can stop even the most resilient of us dead in our tracks. It’s a moment no-one ever wants to confront in their working lives. But maybe you can turn this sudden halt to one chapter of your working life towards a positive pivot to the next?
Try to think of your redundancy as a message. Perhaps it’s a sign that it’s time to get a new job, or to pursue something you’ve always dreamed of like starting your own business. Maybe it’s a sign to retrain or do that study you’ve been thinking about for years. Hopefully, you’ll have a lump sum of money from the redundancy to help ease the transition.
Leaving a secure job to start a new project can be a difficult thing to do. But if it is forced on you through redundancy, then the leap is already made and there’s less to lose. You can’t control what has happened, but you can control how you respond to it. So rather than focus on the negative implications, try to see the opportunities redundancy brings.
Know your entitlements
You’re going to need to work out how long you have before you’ll need to find an alternative source of income.
Firstly, get clear on the terms of your redundancy. Your pay out is based on continuous service with your employer, but terms can vary so check your contract or ask your employer if you’re unsure.
If that’s not feasible, Fair Work’s redundancy calculator can help you to understand what entitlements to expect by answering a few questions about your employment. It’s also a good place to find details of pay and conditions if you’re covered by a registered agreement.
Find out what support you’re eligible for
The Australian government has introduced a range of support initiatives to help people through the COVID-19 crisis that can be accessed through Centerlink.
Read our summary of support for individuals and households to work out what help you may be able to access.
Review your expenses
Once you have clarity on your pay out and government support, the next step is to take a look at your expenses by creating or updating your budget. Financial Spectrum has an online Budget Calculator to help you with this step.
Compare your expenses to any income you have coming in, such as government support and your partner’s income. If you’re concerned that your money will drain too fast, it’s time to strip your budget down to include essentials only. This should be food, rent/ mortgage, essential healthcare, utilities, car expenses, loan repayments and insurances.
Go through your latest credit card statement and take note of all your automatic expenses. Look for subscriptions, gym memberships, streaming, app services, online games or donations to charity. You’ll likely get a shock to find how much you’re actually paying each month. Cancel any that aren’t necessary or you’ve forgotten you even had. If there are cancellation penalties, it’s worth speaking to the provider to see if they can be waived on financial hardship grounds.
This exercise may mean cutting a lot of day to day spending that was standard for you pre-redundancy, but it isn’t forever. You can always make changes again when your financial situation improves.
Think of creative ways to generate income
Given the rising unemployment and uncertainty from COVID-19, you may want to start thinking about creative ways to generate income. This is especially important if you’re struggling to meet your expenses or if there is uncertainty around when your income will pick up again.
Consider any skills you have that would enable you to provide a service to others from home. For example, do you have any creative skills such as writing, editing or graphic design that you could offer through sites such as AirTasker or UpWork? Perhaps testing websites, managing a business’ social media or providing virtual EA services is more your thing?
Think of the opportunities that have arisen from COVID-19 too. Perhaps you have skills that can help organisations transition to an online business model. Or maybe you could use the time in isolation to declutter and sell items you no longer need – people will be looking for bargains at this time. We share more creative ideas in our post 6 ways to make money fast.
See if you can get temporary payment relief
If you have a mortgage and lost your income, you could contact your broker or bank to request a pause on mortgage repayments. While we normally wouldn’t recommend you do this, if you’ve exhausted all other options and are in a crisis situation it could be a lifeline.
If you’re not sure whether you’ll be able to pay rent, contact your letting agent or landlord and ask for a rent reduction. There has been a significant drop in the Sydney rental market, with average rents dropping by up to 22% in some areas and rent reductions are common.
If you think you’ll be unable to meet a bill payment, speak up sooner rather than later. Providers are likely to be more lenient than usual, especially if you’re proactive.
Start planning for the longer term
At this stage we do not know when the COVID-19 crisis will end. We do know that it’s had an enormous impact on the economy that we will feel for many years to come. It’s unlikely you’ll have certainty when your income will pick up again, so it’s wise to think about what bigger changes you can make for the long term.
Perhaps you can move in with family members, rent a smaller place or share with others? Maybe you have a spare bedroom you could rent out? Perhaps you could sell a car, boat, holiday home or other asset? Or plan to generate income through the share economy.
If you’re reading this because you anticipate redundancy may be on the horizon, now is the time to put your finances on a secure footing. With this unprecedented uncertainty, an emergency fund has never been more important. Your emergency account is separate to your savings account; it’s a pot of cash specifically set aside as a contingency fund for when the unexpected happens. A stash of only $5,000 could keep you going for several weeks. It will greatly reduce financial stress, at a time when stress levels are already very high. It will also help you avoid opting for high-interest borrowing options because you’re desperate.
We share lots of ideas on how you can prepare financially in our COVID-19 special: 8 money tips to help you survive financially.
Seek help if you need it
If you find yourself at the point of redundancy with major debts and little in the way of savings, then it’s likely you’re facing an incredibly challenging time. No doubt it will be affecting your mental health, sleep, family relationships and general wellbeing. You may find our article 7 steps for dealing with financial crisis useful and there are many free services available that can help.
The Australian Government is providing a range of support packages, accessed through Centerlink.
If you can’t pay your mortgage, rent or other expenses, speak to your lender, landlord or utility provider.
If you’re worried about paying your debts, the National Debt Helpline is a free service that will work with you to find solutions. Their website has some helpful resources, including a specific COVID-19 section.
Money Smart also has a range of contacts to help you through this difficult time.
If you need help, please know that you’re not in this alone. It’s better to seek help sooner rather than later before your problems get bigger. Taking action will help you to feel more in control of your situation and help your mental health too. With the right support, there is ALWAYS a solution to the problems you are facing.
Rebecca is passionate about promoting the positive impact of quality financial advice on personal wellbeing. Read her full bio here.
