Are you prepared for a sudden change in your financial circumstances? Losing a job is often a scary thought, but with the right planning, you can weather the storm. Let’s dive into the world of financial preparedness. No jargon, no fluff, just some solid advice.
Picture this: you’ve been working diligently at your job, quite content with your situation, when out of the blue, you’re handed a pink slip. The adrenaline kicks in as you wonder, “What am I going to do now?”
Losing a job can feel like being left in the middle of the Kruger Park with nothing but your bare hands, yet it doesn’t have to be this way. Like a savvy ranger preparing for a trek in the bush, you can plan your financial survival pack in advance, so that you’re not caught off-guard. Here’s how you do it:
1. Build an Emergency Fund
This is your buffer, your financial parachute when the ground beneath you gives way. Start by setting aside money, little by little, into a separate bank account, your “emergency fund.” Ideally, this fund should cover at least three to six months’ worth of your expenses. It may take time to build this up, but remember, every bit helps, and this is your first line of defence in the face of sudden job loss.
2. Reduce Your Expenditure
Our lifestyle tends to inflate with our income. To prepare for potential job loss, it’s prudent to review and cut unnecessary expenses. Do you really need that DStv premium subscription or the weekly takeaways? Could you swap your high-end phone contract for a cheaper alternative? Be honest and strict with yourself. Cutting down now means more financial flexibility later.
3. Avoid New Debts
New debt is a bit like inviting a lion into your camp. It may seem manageable at first, but it quickly becomes a threat to your financial wellbeing. If job loss is a possibility, resist taking on new debt. Focus on clearing current debts instead, so that you’re less vulnerable if the income stops flowing.
4. Diversify Your Income
Consider side hustles or part-time gigs. Teach a skill online, rent out a room on Airbnb, sell homemade products – the possibilities are endless. An additional income stream can provide a safety net if your primary income is lost.
5. Keep Your Skills Sharp
Your best asset in the face of job loss is you. By continually updating and refining your skills, you’ll remain competitive in the job market. Make use of online platforms like Coursera, Udemy, and LinkedIn Learning to learn new skills and stay ahead.
6. Health and Insurance
In South Africa, losing a job can mean losing your health insurance. It’s important to explore alternatives in advance. Some medical aids offer unemployment packages that continue to provide coverage during periods of unemployment. This can be a lifeline in times of health emergencies.
7. Be Proactive with Your Pension
In South Africa, if you lose your job, your employer’s contributions to your pension fund stop. You have several options, including withdrawing the money (which could result in a large tax bill), or moving it into a preservation fund or retirement annuity. Talk to a financial advisor to explore your best course of action.
Remember, being prepared for job loss isn’t about being negative; it’s about being smart and ready for life’s unexpected turns. As the old South African saying goes, “A leopard can’t change its spots” – we can’t control the unpredictable nature of life, but we can certainly prepare for it. Take steps today to protect your tomorrow. Build your financial survival pack, and embrace the journey ahead with confidence. Stay prepared, stay resilient!
