Financial preparation if you are about to lose your job
In a corporate world, nothing is indispensable.
YOU attended to your daily grind and just arrived in your office. For all you know, you’ve been doing well on your job, and it seems nothing can go wrong. A general assembly was requested by your head, and they have announced a restructuring within the organization. The company is heading a new direction…and your whole department is affected. You just confirmed it with your manager that your job is at risk. Are you ready to lose your job?
It was announced recently by a local newspaper that at least 25,000 employees will be losing their jobs by 2015.
Primary reason ranges from cost-cutting to change of organization structure.
What others perceived as just another business decision, other’s treat it as their nightmare. This brings the individual into such emotional stress due to financial obligations he or she needs to sustain with the absence of his or her primary source of income.
Crucial situation like this needed to be planned out and should not result to a financial panic.
Reassess your financial situation
This may be a good time to revisit your budget and financial resources. List down all your expenses, assets and liabilities to create a “bird’s-eye view” of your current financial health. Clarify to your office the separation package you will receive and the estimated date of unemployment as you plan for your expenses.
‘Tighten your belt’
Your objective here is to rack up emergency fund as high as possible during the transition. Ideally, try to reach six months’ worth of your total monthly expenses.
Categorize your expenses into three: Can be maintained; can be reduced; can be removed. If you have a family, communicate with them and gain their cooperation in this transition. It is not the sole responsibility of the breadwinner on this lifestyle reduction.
Managing your debt
Communicate with your lenders and ask for temporary adjustments or refinancing of your loan. They may lengthen the number of periods of payments to lower down the monthly amortization.
Prevent it from making it worse
The main purpose of insurances is financial protection during uncertainties. One of the common financial mistakes of Filipinos in the event of financial downturn is to surrender or liquidate their insurances to gain temporary cash. Surrendering your insurance should not be your first choice to liquidate. Talk to your insurance agents on how to trigger temporary premium holiday or premium reduction on your policies while undergoing this transition.
Although this is an emotionally stressful event, maintain proper mental and physiological discipline to keep your health in check.
Limit your engagement to high-risk investments
During the transition, emotions usually run high, and we got easily swayed on easy-money schemes. Internet and social media have a way of manipulating individuals in engaging high-risk, high-return investments, making it look like as an easy-money investment schemes. If you are about to lose your primary source of income and limited financial resources, don’t be tempted to invest a majority of your financial resources on investments you haven’t completely explored (i.e., business, stocks, forex, rents, etc.). Create a level of control on your financial resources by maintaining your emergency fund and having sufficient resources for your Plan B.
Aside from looking for your next job, look also for alternative source of income
Employment competition is very tough, especially for people above 40s. Availability of management position is a scarce and a lot of employers prefer technical over management skills. Given this fact, it would be safe to assume that you may not get another job for quite some time.
Having a Plan B is essential for this kind of situation. Employment is not the only solution to get back to your financial lifestyle. There are a lot of income-generating opportunities that require low or no capital. You can engage into “buy and sell” or become a distributor of products or services (i.e., insurance, real estate, multilevel marketing, etc.). These companies provide support programs and trainings to make you a competitive agent or distributor. With a right attitude and a positive mind-set, this can be a very lucrative business.
Let this be a lesson
IN a corporate world, nothing is indispensable. It may seem brutal, but the more you accept this fact, the more you could prepare yourself emotionally and financially. Create multiple sources of income instead of relying on a single one. Invest early and consistently. If you intend to go back to employment, be paranoid that you could lose your job anytime.
Jake Lingan is a Registered Financial Planner of RFP Philippines. He also holds a qualification of Certified Investment Solicitor. He is currently Unit Manager and MDRT member of one of leading insurance companies in the Philippines.
Source: http://www.businessmirror.com.ph/financial-preparation-if-you-are-about-to-lose-your-job/
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