Prepare for Unemployment Financially | Ways to Safeguard Financial Crisis
Budgeting | Loansby Priyadarshini 21 July 2023
Prepare yourself financially if you, unfortunately, happen to be unemployed. Before anything horrible happens (touch wood! ), it’s a good idea to take some precautions to safeguard yourself in case the worst happens. In this blog, we talk about five ways to prepare for unemployment financially.
Five Ways to Prepare for Unemployment Financially
Maintain a larger emergency reserve
If you are laid off and do not have an emergency fund or appropriate savings, you will be in major difficulty. This is a circumstance in which you could quickly go into insane debt, which could plague you for years even after you find another work. While traditional wisdom holds that your emergency fund should contain 3 to 6 months’ worth of your monthly expenses, if you’re at high risk of being laid off (especially if you work in the fintech industry), it’s a good idea to aim for the higher end of that scale, or even bump it up to 12 months’ worth.
That means that even with 6 months’ worth of monthly expenses saved up, there is an almost 50% chance of success. When determining your monthly expenses, make sure to include the cost of everything from utility bills to insurance premiums and beyond. Basically, anything you spend money on should be included, unless you intend to turn off your lights and live in the dark or shower in rainfall until you find a new job.
Take advantage of every opportunity to improve yourself right now
There could have been a valid reason for your retrenchment, such as your current position becoming obsolete or your skill set failing to keep up with the changes. You’re not going to be reemployed anytime soon until something changes. It is critical to begin retraining yourself as soon as you begin to feel insecure about your job or learn of a possible retrenchment because the longer you wait, the more difficult it is to get back into the industry because a long period of unemployment sends a message to employers that you are now out of touch.
Looking at the skill sets of younger personnel in your firm can assist you to determine which direction you should be upgrading yourself. These are the people who will take over your work once you go, and they have the advantage of being more up-to-date on market trends than you are. For example, executives in marketing today frequently need a deep understanding of digital marketing, social media, and SEO.
Make certain you have passive revenue streams
If your job is your sole source of money, you will be desperate if it is lost. Finding alternative sources of income provides a lot more security in the face of retrenchment. One option to generate a passive income stream is to take up a side job such as tutoring, running a small business, or doing freelance consulting or other work outside your normal job.
But that requires a lot of effort, which turns off those whose lives are already so dominated by work that they don’t have any free time. Fortunately, there are other methods to generate passive income, particularly if you’ve been working for a while and have investments or property. Investment income such as stock dividends, as well as renting out a room in their houses, are common ways for mid-career professionals or retirees to supplement their income.
Maintain the viability of your business networks – Prepare for Unemployment Financially
While there are numerous employment sites accessible for job seekers nowadays, a word-of-mouth reference can sometimes get you a job faster. So, once in a while, it’s worthwhile to keep your professional networks fresh by catching up with acquaintances in the same field. A straightforward approach to interacting with individuals in your business is to use LinkedIn to share articles, like other people’s postings, and communicate with them.
It does not have to be limited to business networks. Maintaining contact with a friend, cousin, family, or acquaintance may offer new opportunities when you most need them.
Begin attending interviews
Even though you had wanted to stay in your current position in the long term, if you are in danger of losing your work, it may be beneficial to stay informed of available alternatives and begin applying for them. Going to interviews improves your communication skills and provides you a leg up if you are retrenched. Interviewing can take months, so getting started early is a good idea.
If you do not get a job as a result of such interviews, that is part of the process. The advantage is that you will have learned more about the interviewing organization. If you come across a job opportunity that seems like a good fit, the ball is in your court.