July 26, 2018

Preparing For Redundancy

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Would you be prepared if you were to suddenly be made redundant? Here are my tips for staying on top of your finances if there is a chance you could be made redundant in the near future.

If you watch the news and read the papers it seems as though each week there is a different company experiencing financial difficulty and heading towards administration.

Following a huge decline in high-street spending recent months have seen the closure of retail giants such as Maplin and Toys R Us with Poundworld following suit in recent weeks.

Other stores have also announced the closure of a proportion of their outlets including Prezzo, which plan to close 92 of it’s restaurants and Mothercare which will close 50 of its stores. Carpetright have already closed 11 of their stores with more to follow.

Across these stores alone that’s upwards of 10,000 people who will be made redundant.

With statistics showing that one in four British Adults has no savings and one in ten spend more than they earn (source) these redundancies could be financially devastating for many, especially those who are already struggling or for whom this was their only source of income.

And while some will be entitled to decent redundancy packages, those who haven’t worked for the company for long enough won’t be so lucky.

While we would all hope we could immediately find another job, often the options are scarce particularly if you live in more rural areas.

Here are some ways you can start preparing if you are worried your job may be at risk or you have been told to expect redundancy in the coming weeks that should help stretch your final pay packet.

Preparing For Redundancy

1. Give Give Yourself a Financial Audit

Taking the time to have a close look at your finances could really save your ass in the coming weeks. Knowing where every penny goes can help assess where immediate savings can made, especially if you’re someone that isn’t usually on top of your finances.

Step 1.

Scour bank statements for unexplained payments – these could be anything from subscriptions you no longer use (think Gym, Netlflix etc) to fraudulent activity on your account.

Scammers will often take a small amount such as £1 before taking a larger amount so report immediately to your bank if you find anything suspicious.

If you pay a monthly fee for your bank account consider whether it’s worth it as many require a minimum deposit each month for certain interest rates/benefits to apply.

It’s also worth checking other bills such as your phone contract and your kids one’s too. We recently discovered my brother had fallen foul of the Cellfish media scam which adds £2.99 a week plus VAT onto your phone bill.

He’s 14, my parents pay the bill and none of them had noticed until we looked at his bill more closely while trying to do something completely unrelated. See more on how to solve this issue here.

Step 2.

Cancel all non-essential spending such as any subscriptions – research shows that on average people spend £20 a month on subscriptions they don’t actually use.

Television: Sky (providing you’re out of contract) Now T.V, Netflix.
Subscription Boxes: Birch Box, Hello Fresh, Gousto
Music: Amazon, Spotify, Apple Music
Gym: There are plenty of ways to get fit for free
Insurance: While house and Car insurance are essential phone and household appliance insurance are not.
Other: Check you’re not being charged for any old phone contracts, magazines or newspapers etc.

Step 3.

Return any recent unnecessary purchases such as clothes, DVDs, Gadgets etc. I always leave tags on clothes until wear them so even if I’m out of the shop’s return policy there is a better resale value on Facebook or eBay.

For further tips on giving yourself a financial Audit see this post: How to give your finances a spring clean.

2. Make an Appointment with a Financial Adviser

I’m lucky enough to have an amazing financial adviser.

She arranged our first mortgage and we see her once a year for a financial health check-up – something her company offers to everyone, no matter their income and whether or not they have investments that need to be reviewed.

There is never a charge for this appointment and there is never any pressure to buy anything she recommends.

If I was ever in the position of potentially being made redundant she would be first on my list of people to call to discuss what I could do in this situation.

Things you might like to discuss with a Financial Adviser

Mortgage – if you have a mortgage it’s worth discussing whether you could remortgage to get a better rate. A friend of mine recently did this and saved £165 a month. Some banks will also allow a payment holiday – especially if you have previously overpaid. However, they may also take into account circumstances such as redundancy or maternity leave. This is usually for a maximum of six months.

Redundancy Insurance – A financial advisor should be able to discuss this with you if you have – they may be able to help you make sense of any jargon you don’t understand and advise as to what payments might be etc.If it’s not something you currently have it might be worth considering once you have another job and are earning again.

Pensions – While this might be the last thing on your mind with redundancy looming it is still worth thinking about how this could affect your pension and whether you will need to move or consolidate your pensions when you get a new job.

Debts – If you have substantial debts they may be able to advise on what you can do reduce payments.

3. Coupon Like Crazy

I’ve written extensively about couponing and it can be a great way to massively cut the cost of your weekly shop. While it can be time consuming and take a bit of practice, starting to get your head around it now could help you stock up for when you really need it.

See my posts on couponing here:

4. Find Hidden Cash

We’ve all heard that old wives tale about every household having at least £1 down the back of sofa in loose change. This is a bit like that – it involves looking in all those places you might have cash hidden away that you might have forgotten about. This could be anything from looking in old bank accounts that you no longer use, to checking all of those loyalty cards to see how much you have. A free weeks shopping when you’ve just been made redundant could be a godsend.

Andy from Be Clever With Your Cash has a full post on it here: Where To Find Hidden Cash

5. Get Help

Depending on your circumstances, such as how much your partner earns and what your outgoings are you could be entitled to certain income-based benefits as well as job seekers allowance while you try to find another job.

Yes, there are many horror stories out there about the Job Center and how difficult the system can be – however, if you need the money then it’s a must-do. You could also take a look at this post which covers moving forward from redundancy.

Knowing what you’re entitled to before redundancy hits could give you some reassurance as to what your income will be in the coming months and let you know how soon you can start applying for what you are entitled to.

Warning: The new ‘Universal Credit’ system that is being rolled out is a bit of a nightmare so if you do apply for benefits expect delays. See the Gov.uk website for further details.

6. Budget, Budget, Budget

A lot of people say they budget, but knowing roughly how much you spend on things is very different to sitting down and allocating a set amount for each area of your spending.

I’ve admitted before that although I’m good at saving money, sticking to a budget for all spending isn’t something I’m particularly good at and therefore haven’t written about extensively.

I did however, spend a year spending just £50 a month on my weekly shop so that might be a good place to start if you need some inspiration.