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How to find redundancy's silver lining

Analaura Luna

For Seinfeld’s George Costanza, finding creative ways to get fired was practically an art form. He tried everything from breaking into the boss’s private bathroom to having affairs with the cleaning staff – but he always seemed to bounce right back up and find a better job than the one he had before. And failing that, he could always invent one – pretending to be anything from an architect to a marine biologist. In the real world, although redundancy brings with it a temporary period of readjustment, chances are that it can also be just the thing you need to get your career moving in an even better and brighter direction. And since redundancy usually comes with financial compensation, with the right financial planning you’ll be able to not only survive redundancy, but use it as an opportunity to get out there and find a job that you really love.

Be prepared

While income protection insurance will cover you if you can’t work because of illness or injury, it doesn’t cover against redundancy, so this is something it’s a good idea to ‘self insure’ against. We recommend that you have at least six months’ worth of living expenses in a personal ‘emergency fund’ – if you have money put aside to pay the bills while you find a new job, you won’t feel as though you have to take the first thing that’s offered to you. And if you do get a redundancy payout, you’ll have even more breathing room while you find that great job, or re-train to take your career in a new direction.

What to do with your payout

Provided you’ve held a permanent position for 12 months or more with a company that employs at least 15 people, you may be eligible for a payout. How much you get will depend on how long you’ve been employed, but the nice thing is that you should get at least some of the payout tax-free. While it can be tempting to use this cash for all sorts of things, the reality is that it's intended to replace your income while you're job hunting, so make sure that you keep it easily accessible so that you can use it to cover the bills until you lock in that dream job. Once you start your new job, it's probably worth thinking about putting what's left of your payout into your emergency fund, because as you've just discovered, it's good to be prepared for whatever life throws at you!

Finding your dream job

If you’ve been retrenched you’re probably wondering what life holds after redundancy – and the great thing is that the answer is ‘It’s entirely up to you!’ Job Services Australia can help you to start working out what you’re going to do next, and there are lots of different training options out there that can help you build up your existing skills, or even learn something totally new. In 2009, 19 050 Americans took part in a training program to help the unemployed, and within three months of completing the program, 69 per cent of them had new jobs – while this did take place in a different economy, it does show how valuable new skills can be. Closer to home, Centrelink and Seek might be able to help you to find education and training options, or you can jump online and check out your local TAFE and university websites to find out about the courses they offer.

Although being made redundant is never easy, there can be a silver lining to this particular cloud – with the right money management strategies in place you’ll be able to pay the bills while you’re looking for work, and in some cases, this can be the ‘nudge’ you need to find a new career that you love even more than your last one. So if you’ve ever dreamed of being an architect, now is a great time to make that dream can come true. And unlike George, you won’t even have to pretend …

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Tags: after redundancy, money management

Author's Biography

Analaura Luna is an author, wealth adviser and founder of Your Family Your Money. Your Family Your Money’s goal is to simplify traditionally complex financial strategies, demystify financial jargon and debunk common financial myths, becoming every family’s first stop for financial advice, information and inspiration.