Your money-making expert. Financial journalist, TV and radio personality.
As many as 9.6 million jobs across 1.2 million companies have been furloughed, and unfortunately, a mass number of redundancies are expected to follow. As quoted in a recent OBR report, a shocking 1.3 million people are expected to flow straight from furlough into unemployment. Meaning the UK unemployment rate could near 15% if we suffer a second wave of coronavirus. Redundancy preparation now could protect you from future financial difficulties.
As of this week, the UK is officially in a recession, and unfortunately many UK businesses will suffer as the government’s support schemes come to an end. For many, the fears of redundancy are settling in, and although being on furlough doesn’t necessarily mean you’ll be made redundant, it’s advisable to prepare for a worst case scenario. Creating a contingency plan now will put you in the best possible stead if you do face a redundancy.
These are our tips on making the most of your furlough to prepare for potential redundancy.
Give yourself an audit and look into the reality of your finances. Assess how much you’re spending, what’s necessary, and where you can cut back.
If you’ve got spare savings then start by paying off any existing debt you have. Savings interest rates are at all time lows and the cost of debt will outweigh any interest earned on savings. But be careful not to spend everything! With potential redundancies on the horizon, set some money aside to ensure you have a stable emergency fund.
If you have multiple debts, it could also be worthwhile looking into debt consolidation loans. These combine all your loans into one, allowing you to pay it back monthly, sometimes at a cheaper rate. Bear in mind that if you’re made redundant it’ll be much harder to apply for credit, and your credit score could be impacted. If this might be a suitable option for you, don’t wait too long to apply! Check out your Experian credit score now.
An emergency fund is a separate account with money put by for, well, emergencies. There’s no set amount you need to have in an emergency fund, but ideally it should be at least 3 months’ compulsory spending, including mortgage or rent payments, utilities and bills, food, and necessary travel costs. If you can’t put much aside, look at savings apps that round up your spending – it’s a good way to save even a little without realising it.
Live as if you’ve already been made redundant. Cut back on any unnecessary spending, use free services like libraries, and put away any spare cash you can. Do you know exactly what you’re spending your money on? It can be surprising to see how much cash gets spent on frivolous things when you’re not thinking about it.
For more reading, check out our articles 15 Frugal Living Tips and What Have You Saved in Lockdown (And How To Keep Saving After).
Use some of your free time on furlough to find other ways to make money. We have a whole Make Money section worth checking out if you’re stuck for ideas!
According to Business Insider, at least 70% of all jobs are not advertised formally. In fact, the majority of positions are either filled internally or through networking. Which is why it’s commonly thought of as the most effective way or getting a job. Not only this, but having a referral from someone already within the company tends to boost your chances of getting a job. Accordingly, if you’re not regularly checking in with your network you’re potentially missing out on job opportunities.
Invest some of your time on furlough into building your professional network and remaining connected with them. Bear in mind though that it takes time to establish a strong network. Creating a habit out of networking though means it’ll quickly become second nature and will be easily built into your routine.
Part of your redundancy preparation should include learning new skills, taking a course, or getting a new qualification. There’s a whole host of options out there, from free courses, to industry-led programmes. LinkedIn Learning is a popular option – it’s a paid-for service but you can get a month’s free trial to start! Learn anything from business leadership and management skills to mastering Photoshop. Whatever you’re looking for, there’s an extensive range of courses given by expert instructors.
Udemy is another popular choice. Similarly, you can choose from a massive range of courses at low prices. Whatever you want to learn, there’s plenty of options to improve your skills without breaking the bank. You can also try the Open University free online courses to learn everything from business accounting to medieval history!
It’s important to do whatever you can to make yourself more attractive to employers. Training courses not only do this but keep your mind active and up-to-date with the latest news and software in your relevant industry. It looks great to prospective employers if your time on furlough was spent productively, with new skills to offer them.
Another part of redundancy preparation is starting your job hunt now! Don’t wait until you’re out of work to update your CV and start looking. It’ll save so much of the stress later down the line. Our article How to Write an Attention-Grabbing CV has lots of tips on how to update your CV and stand out to prospective employers.
The current climate means that job-wise things are tough and competitive. But the earlier you start your job search, the more chance you’ll have of being successful and finding something right for you.
You might not be made redundant when furlough ends – but it feels like a LOT of employers are planning to make cuts in the coming months. Keep these things in mind:
One big, unavoidable cause of redundancies is companies going bust. Sadly, a lot of businesses won’t be able to afford to recover from the pandemic, leaving their employees with no idea where to go.
If your employer goes bust and no other company buys the business, then employees will normally be made redundant. If the company has no money left to claim redundancy pay, then you’ll need to claim your statutory redundancy pay from the Redundancy Repayments Service.
Any owed wages or holiday pay from a business that goes bust can also be claimed from the National Insurance fund. Unlike redundancy pay, where the first £30,000 is tax-free, all of this money is taxed and is limited up to £538 a week (or £560 in Northern Ireland).
Full information on your rights if your employer is insolvent can be found on the Government website here.
If you have anymore questions on redundancy preparation head over to our messageboards where you can find loads of help and get your queries answered.
In the meantime why not check out our FREE eBook – ‘Your Redundancy and Debt Action Plan’. Or one of the articles below.