It’s a situation that we’d rather not think about, but that affects most of us at least once in our lives. Namely, the financial implications and struggles that result from losing your job. Unemployment requires you to adjust your life and often to make sacrifices. Reassessing your financial situation is a must. We look at budgeting when you lose your job. Here are some key things you could do to help your situation.
Revise your budget
It’s the obvious place to start, and it’s the most important step to take. Your budget after redundancy is likely to be lower than before it, unless you have been well remunerated on leaving your post. Re-evaluate your spending and identify where you can make savings. Begin by ascertaining what your income will be per month until you find another job. This income should combine redundancy pay, benefits and savings. Then go through all your spending and cut back wherever you can. Also determine, if you have savings, what slice of them you decide to use to get by until you source alternative employment.
Budgeting When You Lose Your Job – Claim benefits
If this is an option, you are fully entitled to claim for benefits. You need to check that the rules entitle you to them. Factors that decide this are numerous, including your redundancy payment, and any savings you may have. Depending on those factors, you may entitle yourself to a range of benefits, including jobseeker’s allowance. If you are not sure, visit your local job centre to find out what financial support you might be entitled to.
Manage any redundancy pay
It’s important to establish that you’ve paid the right amount of tax on redundancy payments. If you received less than £30,000, HMRC should not tax you, though these rules can change at anytime. If you are unemployed and feel you are entitled to a tax rebate, contact HMRC. You will likely have to complete a P50 form.I recently received arrears from an old job, and had to chase 40% of the amount that the taxman had taken. Deductions included pension payments, NI conts and a 40% tax deduction. Often emergency tax codes are used when payouts are made, so it is always advised you have been taxed correctly.
Also, a redundancy pay out can seem like a large amount of money when it lands in your bank account, but life’s costs will ensure it will soon whittle away. Ensure you put the money aside if you can, preferably somewhere that it can earn some interest. Never go on a spending spree if unsure where your next job is coming from.
Budgeting When You Lose Your Job – Deal with debt
If an employer has ended your job, it is natural to feel stress about your financial situation. This is especially so if you hold debt. Turning a blind eye to your problems does not help anyone. you must deal with any issues head-on. Firstly, prioritise those debts that are the most important and then allocate funds to pay the others where you can. Mortgage payments are a clear example of a priority. If you are struggling with a repayment, always speak to someone, be it a debt advisor, or the relevant lender. They can help restructure debt payments.
Do not continue to borrow
If you have debt, there is nothing to be gained by adding to it. The only plausible reason is if you are guaranteed new employment in the near future. Without that safety net, it is ill-advised to take on more debt. If you are struggling seek advice once more, and see if friends or family can assist you in the short-term.
Find a new job
Simple! Of course it is not that simple, but it is important that you try and get new work as soon as possible. Do not use a redundancy pay off as an excuse to have some time off. You will soon get yourself in a rut. you will soon run through those funds. Ensure that you get back into employment as soon as possible. Check websites. Check employment agencies. go to the jobcentre for advice and listed jobs. Update your CV. Contact employers directly and enquire about opportunities. Show willing, and you increase your chance of getting a new job.
Budgeting When You Lose Your Job – Stay disciplined
If an employer offers you a job, that is great. But you should consider enforcing the same strict conditions on your budgeting for a while longer. This is especially true if whilst employed you depleted your savings, or increased your debt. Stay strict, and win back your losses. Once you are in the clear, you can resume your previous lifestyle.
