Retrenchments are one of the most traumatic events that a person can go through.
While you are in a fragile emotional state, you will be called upon to make lots of important decisions about unfamiliar financial issues. These decisions will have massive financial implications later in your life.
Having been retrenched myself I have first hand experience of what is involved and what helped me get through it. I have put together a guide, based on my own experience as well as my background of being a certified financial planner to help you get through this.
Download my Retrenchment Budget spreadsheet to assist you with your financial planning during this difficult time:
It is unfortunate that the company you worked for ran into trouble and need to reduce headcount. It is not your fault.
Don’t make the mistake of confusing your job with who you are. Your job is one aspect of your life but you are so much more.
There was a reason why your previous employer downsized.
Try to understand why this happened.
Was it just because they lost a contract?
Was it because of a deeper structural reason which is making their business less relevant?
For example, were they trying to sell fax machines in a time of email? If this is the case, then give some thought as to whether you should remain in that particular industry.
Before you do this, take a hard and honest look at what you do.
Emphasize these skills when you update your CV.
Update your LinkedIn profile and start interacting with people in your industry.
It is important that you keep up to date with what is happening in your field and that you actively build your network.
Many recruiters use LinkedIn to look for candidates.
This is one of your biggest challenges.
You do not know how long it will take for you to get another job so you need to manage your money to ensure that it lasts as long as possible.
You need to do 3 things:
Hint: I created a handy excel spreadsheet with a dummy budget that you can use to easily calculate this amount. Drop me a message and I will gladly forward it to you.
You now need to find out where you will get the money for this.
Here are some of the sources
If you contributed to the UIF fund, you will be entitled to UIF ranging from R3 500 to R6 730 a month. This will be paid for a maximum of 12 months
If you have any income from investments, including rental properties, list them here
If you have any income from any other occupations or contract jobs, list them here.
You will have a gap between what is going out and what is coming in. This gap must be filled with income from your lump sums
You will have access to the following lump sums:
Your employer will generally give you a severance package consisting of the following (it may differ from company to company):
This needs to be treated with extreme care as this money is what will sustain you when you are older. Only touch it if you are in dire straits and you have spoken to a qualified financial planner.
Your financial adviser will help you structure your investments so that you can access these lump sums to supplement your income till you get back on your feet. There are tax implications so this needs to be done carefully.