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
How to survive and thrive in the gig economy
What do Uber drivers, Upworkers and Taskrabbiters have in common? They’re part of what’s often referred to as the “gig economy”, comprising millions of Aussie workers. ...Read more
Salary
Unions call for minimum wage increase as Australians get back to work
The unions are calling for the minimum wage to be increased to help aid the economic recovery from the COVID-19 downturn, as the latest job figures show Australians are getting back to work. ...Read more
Salary
Labour market’s ‘miraculous’ recovery
The economic recovery is continuing, with Australia’s unemployment rate continuing to fall, official figures show. ...Read more
Salary
Job ads hit 12-year high
Despite unemployment remaining above pre-pandemic levels, the number of businesses looking for staff has reached a 12-year high, a new study has revealed. ...Read more
Salary
Menulog pivots towards employment model
Menulog says it will move away from the independent contract model towards hourly pay within the next few years in an industry first – a move that has been praised by the unions. ...Read more
Salary
‘Exploited workers’ earning just $10.42 per hour
The unions have slammed the gig economy after it was revealed that workers are still earning below a minimum wage, even during peak times. ...Read more
Salary
Unemployment falls, job ads surge as recovery continues
Australia’s unemployment rate has hit a one-year low, while the number of businesses looking for staff has hit a 12-year high, new research has revealed. ...Read more
Salary
Job vacancies surge on eve of JobKeeper ending
Despite JobKeeper’s official end just over a week ago, businesses across the nation are looking for employees, stats have revealed. ...Read more
Is the market overheating; should ETFs take your fancy, and what’s happening to the low and middle income tax offset?
Listen now
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Meet the Manager with Trilogy’s Philip Ryan: RBA rates and property price growth
Listen now
Salary
How to survive and thrive in the gig economy
What do Uber drivers, Upworkers and Taskrabbiters have in common? They’re part of what’s often referred to as the “gig economy”, comprising millions of Aussie workers. ...Read more
Salary
Unions call for minimum wage increase as Australians get back to work
The unions are calling for the minimum wage to be increased to help aid the economic recovery from the COVID-19 downturn, as the latest job figures show Australians are getting back to work. ...Read more
Salary
Labour market’s ‘miraculous’ recovery
The economic recovery is continuing, with Australia’s unemployment rate continuing to fall, official figures show. ...Read more
Salary
Job ads hit 12-year high
Despite unemployment remaining above pre-pandemic levels, the number of businesses looking for staff has reached a 12-year high, a new study has revealed. ...Read more
Salary
Menulog pivots towards employment model
Menulog says it will move away from the independent contract model towards hourly pay within the next few years in an industry first – a move that has been praised by the unions. ...Read more
Salary
‘Exploited workers’ earning just $10.42 per hour
The unions have slammed the gig economy after it was revealed that workers are still earning below a minimum wage, even during peak times. ...Read more
Salary
Unemployment falls, job ads surge as recovery continues
Australia’s unemployment rate has hit a one-year low, while the number of businesses looking for staff has hit a 12-year high, new research has revealed. ...Read more
Salary
Job vacancies surge on eve of JobKeeper ending
Despite JobKeeper’s official end just over a week ago, businesses across the nation are looking for employees, stats have revealed. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
