13 steps to improve your financial health if you lose your job

For many job security has never been an issue.  However with the impacts of COVID19 hitting our economy many businesses have begun laying off employees left right and centre. We hear about the big job losses in the news several times a week but many small employers are also reducing jobs, cutting hours or asking staff to take pay cuts. 

For many this is a frightening reality. We have financial commitments based on our incomes so even a 15% pay reduction can have a significant impact in our ability to pay bills. 

In April 2020 the number of people of Jobseeker increased by 69% from the previous year. Unfortunately under 30’s were over represented in these numbers and are also the least likely to have emergency funds to support them. 

So what should you do if you’ve lost your job?

Firstly be kind to yourself. This isn’t a reflection of your work. It’s something thousands of New Zealanders are facing due to something that was beyond what any of us could imagine 6 months ago. 

In a perfect world we’d all have 3-6 months of emergency savings in our bank accounts to get us through these times. However the reality is if you are living in a big city with high housing and transport costs it’s unlikely you’ve been able to save this much. 

Whether you have an emergency fund or not follow these 13 steps to minimise the financial impact on you and your family. 

1. Get clarity on where your money goes. Look at your last 3 months of expenses and categorise them (shelter, utilities, supermarket, eating out, clothes etc). 

2. Determine the essentials (shelter, food, utilities and transport) and pay these first. 

3. Be prepared to cut non essentials and luxuries from your budget until you find employment. Cancel any subscriptions that you no longer use or can do without temporarily. Remember this is temporary, it’s not forever. 

4. Talk to your bank or your landlord. Explain your situation and see how they can help. A landlord may discount your rent temporarily and you may be able to negotiate an interest only repayments or a payment holiday from your mortgage.  

5. Downsize your essential bills. With the remaining essential bills review these and see if you can reduce them. For example move your phone and internet onto lower cost plans.

6. Cash is king - If you have other personal loans or car loans call all your creditors and ask to delay your payments, interest and penalties.  or for an extension. Even if you have emergency funds and can afford to make the payments it's good to maintain as much cash as possible.  

7. Research budget food recipes online and meal plan. Eating out and supermarkets are often an area of large overspend. 

8. Invest in a new resume. Many recruiters and large companies use algorithms to shortlist candidates based on key words in their resumes. Given you could be competing against hundreds of applicants for one position investing in a professionally written resume may help you secure an interview. 

9. Understand what government assistance is available for example Jobseeker, Accomodation Supplement, Winter Energy payment and Working for Families tax credit. This will vary depending on your situation.  

10. Assess your living situation. There are a lot of variables to consider when deciding whether to move so don’t make this decision lightly. Things to consider - how long can you life off you emergency savings once you’ve made cuts to your budget? What type of work are you looking for? How specialised is your career? Are you willing to retrain or do anything to earn money? Are you single or do you have a family? Do your children need stability? Can you move in with family? Can you get a boarder or flatmate?

11. Sell things you no longer want. Take this time off work as an opportunity to go through your belongings and declutter. Perhaps there are something you’ve been meaning to sell for a while. Now is the best opportunity you’ll ever get. Cut the clutter and use the cash to help build your emergency fund. Recently I sold a silhouette printer that had been sitting in my cupboard for 2 years for $450! 

12. Look for ways to earn some extra money while you look for another job. Babysitting, gardening, mowing lawns, contract work, selling products online.

13. Be grateful for what you have and look for positivity. When bad news hits its easy to get so focused on the negative we forget all the positives in our lives. Keep a gratitude journal each day to help keep things in perspective. Spend time with family and challenge each other to come up with new recipes or activities that are in line with your budget.