Earn
How to prepare yourself for a potential job loss
Australians are being advised to prepare for potential job losses as the fallout from the COVID-19 continues to hurt businesses.
How to prepare yourself for a potential job loss
Australians are being advised to prepare for potential job losses as the fallout from the COVID-19 continues to hurt businesses.
The economic slowdown has already seen the official unemployment rate rise to 7.1 per cent, resulting in more than 2.4 million Australians relying on their superannuation to get by.
The current economic climate has also seen 429,000 mortgagors take a mortgage holiday, while a further 1 million Australians are now relying on government benefits.
Licensed financial adviser Helen Baker says: “Consumers are struggling financially, with many experiencing concern for their job security and the impact this would have on meeting their debt repayments and bill payments.”
Ms Baker said the economy can change based on health outcomes, using Melbourne as an example.
“Melbournians may be left in a particularly vulnerable state now given the second wave of COVID-19 forcing businesses to shut down again. When JobKeeper payments end in September, it’s likely that we’ll see even further layoffs, so those lucky enough to have held onto work during the height of the pandemic may find their circumstances change,” Ms Baker explained.
She highlighted that Australians who are worried about the financial implications of COVID-19 should act now.
“Aussies should get on top of their finances now to prepare for a risk in loss of income. This could include finding ways to pay down debts faster, building an emergency fund, and creating a second income stream,” she said.
Ms Baker has prepared eight tips for your finances in case of job loss:
1. Consolidate your debts. It’s important to pay down your debt as quickly as possible while you still have a steady income. If you can, consolidate your credit card debt and personal loan into your mortgage by refinancing your mortgage.
2. Negotiate interest rates, or move your debts to lower-rate products. While you can consolidate your credit card debt into your home loan, another idea is to transfer your card debt balance to a new zero-interest balance transfer credit card. Be aware of the interest-free term, usually six months, after which your interest will return to the full rate. With regards to home loans, for the first time, rates have fallen to below 2 per cent. Now is a good time to refinance and save on interest payments.
3. Create a six-month emergency fund. In a normal economy, Ms Baker recommends that households save an emergency buffer of three months’ worth of expenses in the event of a job loss, as it generally takes three months to find a new job. In the COVID-19 environment, in which job listings have fallen significantly, consider saving at least six months’ worth of income. You can build up the buffer by reducing your spending to essential items and services, withdrawing superannuation early, or finding a second source of income. If you are made redundant, the redundancy package can make a sizeable contribution to this buffer, as can your FY20 tax return.
4. Generate a second income stream. If you aren’t working long hours in your existing job, consider setting up a second income stream. This could be a casual job or self-employed work such as tutoring or Uber driving. Alternatively, you could list a spare room, spare garage, parking space, or seldom-used car on share platforms such as Airbnb, DriveMyCar or Parkhound to generate ongoing income. If you have kids of working age, discuss as a family how you can work together to increase the household income. Have unused items lying around the house? Offload anything you’re no longer using by listing it on platforms such as Gumtree, eBay or Facebook Marketplace, or at street markets.
5. Consider a reduction in hours over a redundancy package. If your company is starting to discuss a decrease in working hours and redundancies, and offer you a choice, it might be better to have your hours reduced. The former option could see you become eligible for JobKeeper payments and you may have a job to go back to after the “stand-down” period.
6. Consider looking for work while you’re still employed. If you think it’s fairly likely that you’ll lose your job, start applying for new jobs now – particularly in industries that are booming. Employers often look upon employed applicants more favourably. Search for roles outside of job portals and consider networking online through LinkedIn and joining online business events and groups to find suitable positions.
7. Get a realistic picture of your spending v income. Review all your expenses using a budget spreadsheet that allows you to see all your incoming and outgoing expenses. Following this, create a spending plan and separate it into your three budget areas: “your absolute basics”, “nice to haves”, and “living the dream” – the latter representing your goal once you’re back on your feet. Analyse what the bare minimum is that you can live off, then put the rest away into your savings.
8. Use your annual leave – slowly. Consider using some of your annual leave – or long-service leave, if applicable – now, as you could be at risk of losing some of your leave if your employer goes into insolvency. Rather than taking a long stretch of leave, consider taking off one day a week or fortnight. If your employer is in the unfortunate position of having to decide who they will stand down temporarily, remaining in the workplace and showing your value might help you retain your role.
About the author
About the author
Salary
Coles asked to disprove $115m in alleged wage theft
One of Australia’s biggest supermarkets faces allegations that it underpaid more than 7,500 employees a total of $115 million. ...Read more
Salary
Gen Z left behind in progress to gender equality
Women under 25 may emerge from the pandemic in a worse financial position than when it began, new research has shown. ...Read more
Salary
Show me the money: I deserve a COVID recognition payment, and so do you
Staff are currently in high demand. But they’re also mostly overworked, overtired, underplayed and underpaid. ...Read more
Salary
Is Australia headed for the ‘Great Resignation’?
A wave of resignations from Australian workers is expected in the next six months. ...Read more
Salary
Earnings surge in lockdown, but is a slump ahead?
A new report from CBA has shown that it may actually pay to be in lockdown, as growth in household income surged ahead in NSW and Victoria. ...Read more
Salary
RBA sets sights on 4% unemployment
The RBA has updated its key objectives in order to jolt the Australian economy into growth, including a two-decade low unemployment rate of 4 per cent. ...Read more
Salary
Aussie women required to work 61 extra days to earn the same pay
61 days is how much extra time a woman must spend in the workforce to achieve the same financial outcome as her male counterpart, with the gender gap expected to grow further, research has revealed. ...Read more
Salary
Pandemic sees spike in remote-work job postings
Businesses are looking far and wide to attract key staff members as lockdowns accelerate the move towards online working, meaning businesses can now attract staff who do not need to be in the office, ...Read more
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
How the post-lockdown period will influence property, what the soaring NFT market means, and defining financial wellness
Listen now
Salary
Coles asked to disprove $115m in alleged wage theft
One of Australia’s biggest supermarkets faces allegations that it underpaid more than 7,500 employees a total of $115 million. ...Read more
Salary
Gen Z left behind in progress to gender equality
Women under 25 may emerge from the pandemic in a worse financial position than when it began, new research has shown. ...Read more
Salary
Show me the money: I deserve a COVID recognition payment, and so do you
Staff are currently in high demand. But they’re also mostly overworked, overtired, underplayed and underpaid. ...Read more
Salary
Is Australia headed for the ‘Great Resignation’?
A wave of resignations from Australian workers is expected in the next six months. ...Read more
Salary
Earnings surge in lockdown, but is a slump ahead?
A new report from CBA has shown that it may actually pay to be in lockdown, as growth in household income surged ahead in NSW and Victoria. ...Read more
Salary
RBA sets sights on 4% unemployment
The RBA has updated its key objectives in order to jolt the Australian economy into growth, including a two-decade low unemployment rate of 4 per cent. ...Read more
Salary
Aussie women required to work 61 extra days to earn the same pay
61 days is how much extra time a woman must spend in the workforce to achieve the same financial outcome as her male counterpart, with the gender gap expected to grow further, research has revealed. ...Read more
Salary
Pandemic sees spike in remote-work job postings
Businesses are looking far and wide to attract key staff members as lockdowns accelerate the move towards online working, meaning businesses can now attract staff who do not need to be in the office, ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
