Disclosure Statement: Durand Financial Services Pty Ltd and its advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. General Advice Warning: The information contained within this website does not consider your personal circumstances and is of a general nature only. You should not act on it without first obtaining professional financial advice specific to your circumstances.
Dealing with unemployment
Losing your job isn’t just about your career. It can affect your health and relationships.
The first thing to do is sort out your finances for the next two months. After that, you can start thinking about the longer term.
If you’re struggling after losing your job it’s ok to ask for help. Speak to family and friends about how you’re feeling and remember you can get free financial counselling for your money problems.
A useful booklet is available from Beyond Blue: Taking care of yourself after losing your job or call 1300 224 636. If you’re feeling stressed, you might be interested in getting a free assessment and finding out more about mental health issues from Mental Health Online.
If things are really getting on top of you, get professional help. Ignoring the signs may only make things worse. Talk with your GP. If you think you might hurt yourself or are having thoughts about suicide, call the Lifeline 24-hour crisis support service on 13 11 14 or try their crisis support chat service.
You will feel able to make clearer decisions once you know how much money you really have. The first steps to help you get on top of your budget are:
- find out what you have in savings
- list every expense you’ll have to meet for the next two months.
Include necessities like rent or mortgage payments, loans, health care, medicines, car and home maintenance and insurance premiums.
Know where you stand financially.
To work out how long your cash will last, it’s best to assume you’ll have no income for the first few weeks.
If you don’t have much cash on hand and didn’t get a redundancy or termination payout, you may need emergency help immediately. Find out where to get urgent money help.
Limit your spending
If your income drops, bite the bullet and change your spending habits as soon as possible.
Bringing your spending into line means you may have to postpone holidays; cut down on things like coffee, alcohol, cigarettes, pay TV or mobile phone calls; spend more time shopping around for the best prices; and hold back on buying clothes and eating out.
Resist the temptation to use your credit card to cover shortfalls. The interest you’ll have to pay will only add to your financial burden in the long run.
Paying your bills
If you’re having trouble paying your water, phone, gas or electricity bills, contact your utility providers and see if you can negotiate a better repayment arrangement. For more details see our webpage on problems paying your bills and council rates.
If you’re struggling to pay your loans and credit cards, talk with your credit or service provider and let them know you are experiencing financial difficulty and ask for a hardship variation. Taking action straight away can stop a small problem from becoming a big one.
For general tips on keeping up with your credit card and loan repayments, see making repayments.
Check if you’re owed anything from your past job
Are you entitled to any payments from your employer? Australian Unions may be able to provide information about your entitlements or help you to negotiate with your employer. Read their blog or call 1300 486 466.
If you lost your job because your employer went into liquidation or went bankrupt, you may be able to make a claim through the Fair Entitlements Guarantee (FEG).`
Don’t forget your super
While you are not working don’t forget about your super. Check how much you have in your super fund and think about how you can top up your super balance when you start working again. Consider your investment options and insurance needs and think about the effect a break from work may have on your super balance.
Work out how taking a break from paid work will affect your super and retirement.
If you get retrenched, you might be entitled to benefits through your superannuation fund. You should also check whether your life or disability insurance will continue when your employer stops contributing, if it’s through your super. Some funds allow you to continue your insurance cover but may only give you a short timeframe to change your arrangements.
Think about getting temporary or part-time work while you look for another permanent job. Put your name down with temp agencies, ask family and friends if they know of any jobs, or ask local businesses if they need an extra set of hands. Visit Australian JobSearch to see a list of job vacancies around Australia.
For more training or work experience to help you find and keep a job, contact Job Services Australia.
Contact the Department of Human Services to find out what government assistance you may be entitled to. Some benefits have waiting periods, so contact the department as soon as you can. Your reduced income might mean you’re eligible for the Family Tax Benefit – or a bigger benefit payment.
You can also get free help from the Department of Human Services’ Financial Information Service (FIS) officers and social workers, or attend a FIS seminar held in your local area on redundancy and financial issues.
A redundancy is when your employer terminates your employment because they either decide that your job is no longer needed, or they become insolvent or bankrupt. You will usually receive a redundancy payment, which will have rate of tax applied that’s lower than your marginal tax rate.
A redundancy package will include a redundancy or severance payment and your unused annual leave and long service leave. It may also include a payment in lieu of notice and a ‘golden handshake’ or other incentive payment.
A redundancy package includes your unused annual leave and long service leave. Accrued sick leave or personal leave is not usually paid out to you when you leave an organisation.
If your employer has gone into administration or liquidation and you are owed entitlements after losing your job, you may be able to get financial help from the Australian Government through the Fair Entitlements Guarantee.
For more information on the tax rates of a redundancy package see the Australian Taxation Office’s redundancy payments webpage.
Some insurers offer redundancy insurance as optional cover on income protection policies. Redundancy insurance can provide short-term financial assistance if you lose your job
Managing your payout
Unless you are retiring, your payout will have to last you until you get another job, and this may take longer than you think. Prepare an emergency budget to get a clear idea of your ongoing expenses and bills, and how you will pay them without a regular income.
If you have received a large payout, you could:
- put most of it into a high interest savings account, or
- deposit it into your home loan if you have a redraw facility.
Then you can draw the money down slowly to cover your ongoing expenses.
Paying down debt is a great idea when you have a new job to go to, but first find out what waiting periods (if any) will apply before you can access unemployment benefits. Make sure you can cover your expenses for this period before making extra repayments on your debts.
Losing your job can be a very stressful experience. Prepare a budget, find ways to cut back on your spending and always ask for help – both financial and emotional – if you need it.