How to organise your finances if you lose your job
Losing your job can be one of life’s most stressful experiences, but these tips may help ease the blow.
If you find yourself out of work, there is no need to panic. There are steps you can take to sort out your finances while looking for a new job.
TODAY spoke with Money Magazine editor Effie Zahos who gave some of her best tips.
TODAY: Effie – what’s the first thing you should do if you’re out of a job?
ZAHOS: The first thing you need to do is add up all your expenses including your priority expenses and the things you cannot live without, in other words – the basics. For example shelter – how much is your rent or mortgage repayments? How much is your electricity and water bill? Add up the monthly figure then multiply it by how long you estimate it will take you to find a new job. Depending on which research you read, it can take up to six month for people to find new work. It also depends on what field you’re in, some being more competitive than others.
The scary thing is most of us don’t have that money sitting in our bank accounts because we simply don’t prepare for the unexpected. That’s when you need to ask yourself, ‘where is that money going to come in from?’
Those with jobs also need to think about an action plan for if they lost their job today and start preparing.
TODAY: Obviously, you lose your work income – but are there any other sources of cash?
ZAHOS: In Australia there are many support systems to help people who are shown the door. First up, check to see if you are receiving a redundancy. Other sources of cash may come in the form of insurance. You might may be surprised to learn you have some cover in your super for example income protection. Also check to see if you are eligible to receive any government help. Bare in mind, if you get a redundancy, you will not be eligible for Centrelink benefits for the period of time you have been paid for. For example, if you received a payout equal to 12 weeks plus two weeks for unused annual leave, you won’t be eligible for Centrelink payments for at least 14 weeks. My tip, get in touch with Centrelink. Let them know you’ve lost your job, and find out what you are entitled to. You may be eligible to new-start allowances or family benefits, so it’s important to contact them straight away as it can be a while for the payments to commence.
TODAY: What’s the best way to sort out expenses?
ZAHOS: You need to organise your debt into priority debt and non-priority debt. Priority debt are the things you can’t afford not to pay for example rent, mortgage and utilities including internet which is something you will most certainly need to search for a new job. Don’t worry about paying other debts like unsecured loans, credit cards, paid services. Instead let the creditors know you may be late to make repayments. Failure to notify them of your changed circumstances may affect your credit score.
TODAY: When money’s tight, something’s always got to give – what spending should we avoid?
ZAHOS: Now that you know where you stand, you’ve got to make an emergency budget. This is only temporary, so don’t freak out about it. During this period, you’re going to live on a very tight budget, so forget the alcohol, coffee, bottled water, new clothes and nights out.
Interview and additional text by Luke Worthington.