Most of the time a job loss comes as shock or as a surprise.
Is there anything that you can do to prepare yourself financially before a job loss hits you?
I remember back in 2010 when my husband lost his job unexpectedly.
I had just started my maternity leave.
And we were waiting for the arrival of our second child, his job loss could not have come at a better time like this.
We had no emergency fund at all we were living on our two incomes.
His sudden job loss meant we had to live on just my maternity pay.
Though his job loss we learned many money lessons we had done in the past.
In this case, we learned that failing to prepare for a job loss or a reduction of income is a big mistake.
Here are so tips on how you can prepare yourself for a job loss financially.
1 . Set Up An Emergency Fund
An emergency fund is very important whether you are preparing for a job loss or you are preparing for a reduction in your future earning you need to have it.
Without an emergency fund, you will find it difficult when you lose your job.
Work out how much you can afford to save each week month and set up a saving account which you pay in every month.
Resit the temptation of dipping into your emergency fund and let your saving grow.
Most people fear a job loss because they know that they do not have any savings to live off even for just one week in the event that they lose their job.
Having a good emergency fund means you can live off it a few month without money worries whilst you look for another job.
2. Set Up A Budget
When you are facing a possible job lose it’s important to look after the money you have before the actual job loss.
The only money tool that can help you achieve this is a budget.
Having a monthly budget will help you to manage your money much better.
Avoid overspending by directing your money where its supposed to go by using a budget.
When my husband lost his job we did not use a budget before in our house we just use our money as we please.
We learned the hard way but in the end, we finally learned how to budget.
And wished we had started years before.
3. Cut Your Expenses
Once you start budgeting cutting your expenses will come as second to nature to you.
Budgeting lets you see how you are spending your money.
Cutting your expenses will be easier once you know how much you are paying for your expenses.
In preparation for a job loses you need to cut your expenses ruthlessly.
It might be painful at the start but in the event that the actual job loss does occur you will thank yourself for doing that.
Remember as you cut your expenses to use the amount saved to top up your emergency fund.
For example, say you cut your monthly eat out money from £300 to £200 you can put the £100 saved to your emergency fund.
4. Live On One Income.
Learn to live on one income whether you are a couple or you are single this will help you in times of financial difficulties.
Once you grasp the concept of living on one income saving money will become easy for you, all you have to do is sit back and watch your savings grow each month.
5. Find Other Ways To Earn Money
If you are facing a job loss you need to find other ways to make extra money so that you boost your emergency fund.
There are many ways to earn extra money which include:
1. Taking up extra hours.
4. Tuning your hobby into a money-making machine.
6. Manage Your Debt Better.
Don’t ignore your debt because you are facing a job loss you will only make your money problems worse.
Continue to pay your debts.
In the event that the actual job loss does occur talk too your lenders about your current situation and the possibility of lowering your debt repayment plan to suit you.
Most lenders will understand.
Ask them to lower your repayment plan, by doing this you will incur more interest on your original debt.
This is a better option than deferring any debt payments which can result in a bad credit score in the future.
Losing your job can be a bit scary at first glance but it’s important to know that you are not the first person on earth to lose a job.
These days there are no jobs for life once you get a job know that you will eventually somehow you will lose that job whether it for your own making or not.
There are other things in life you have no control over no matter how hard you try.
But there are a few things I mentioned in this article that can make life easier for you when you are facing a possible job loss.
Over to you…
Do you enjoy your current job?
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