Losing a job can be devastating both emotionally and financially. Without an income coming in, how are you supposed to keep paying those bills? The key to survival is to act quickly and strategically. This guide offers a few steps to help you stay above water during this tough period.
Secure redundancy pay
First, check your employment contract for redundancy entitlements. In the UK, if you have worked at a company for over 2 years and are over 22 years old, you are legally entitled to one week’s pay for every year you have worked at the company. This could help you cover bills for a short period.
If a layoff was unexpected, you may be able to negotiate a better redundancy pay package. Also consider claiming unused vacation pay or bonuses you are owed. Many redundancy pay packages are tax-free, however you should confirm this through HR.
Claim benefits
Unemployment benefits are your next lifeline. In the UK, this includes New Style Jobseeker’s Allowance (JSA) and Universal Credit (UC). Apply for these as soon as you can.
You can receive JSA for up to 6 months – it is only a small payment of £92.05 per week, but can still serve as a small extra payment to help you get by.
UC is paid monthly and it is means-tested. The amount you are paid depends on household income, whether you have a disability and whether you have children. This is typically the better benefit option, but not everyone is eligible.
Contact creditors
It’s a good idea to contact creditors soon after you are made redundant to notify them of your situation. If you are currently not in arrears, you may be able to arrange options to freeze payments or temporarily lower payments. Don’t wait until you miss payments as your options will be reduced.
If you’re already in a lot of debt and job loss has hit at the worst time, there are debt support services that you can reach out to. Debt settlements could be a path to consider, as discussed in more detail by financial advisors like Alex Kleyner.
Create a tight budget
Be prepared to temporarily reduce your spending until you get a new job. If you had vacations planned, these may have to be delayed. It may be wise to create a tight weekly food budget to help your money stretch – eat more home-cooked meals and look out for savings.
Some people are able to find a new job straight away, but for others it can take months. It’s best to be cautious so that your money lasts.
Find new income streams
While the focus should be on getting a new job, consider whether there are other small income streams you can consider in the meantime. Are there any possessions that you can sell for some extra money? Can you do some freelancing?
Any extra money you can make will be useful. Don’t be afraid to turn to friends and family for help if necessary.
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