📦Here’s how to Bullet-Proof Your Finances to Survive a Layoff

The current labour market is still super-tight but cracks are starting to show especially in the tech and banking sector. They stupidly over-hired during the pandemic believing that interest rates would remain stuck to the ground like glue while central banks practically handed out money left right and centre. Which left these 2 sectors totally exposed to shocks or basically any reversion from a brilliant, almost unreal investment backdrop to one slightly more normal! 

You know what happened shortly after. We got smacked in the face by inflation that turned out to be the total opposite transitory, hitting its highest level in over 40 years while interest rates were being racked up to deal with the battle. They’re now sitting at 4%. Mortgage rates are hovering just below 6%. This is a huge shock to the system. Read here the 3 simplest ways to boost your financial resilience that anyone that adopt!

From Google to Goldman, layoffs are heating up and spreading. Spotify sacked 6% of its workforce, Salesforce 10% but Coinbase took the top spot laying off 20% of its workforce! Though I did come across a comforting stat that ~80% of fired tech workers found new jobs within 3 months and 40% of them found new jobs less than a month after they began searching! Read here what these tech layoffs mean and why you should never let your job define who you are.

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Surviving a job loss is made 10000X easier with bullet-proof finances

If there is one thing that is worse than losing your job it’s not being prepared for it in the first place. Not having your ducks in a row can make the shock a gazillion times harder. It’s better to be mentally prepared for the worst. That way it won’t feel so much like a betrayal. Even though it probably will.

No one’s job is ever 100% guaranteed no matter what you might tell yourself. Anyone, anywhere, can get fired in the blink of an eye. Or on Zoom if you’re lucky! Remember that CEO during covid who fired 900+ workers over a screen?! Nasty.

The key is to have enough money stashed away that if you ever lose your job you can walk out there with your head held high knowing you’ve got your back! There’s nothing better than the feeling of being able to have the worst happen to you but knowing you’ve got the finances to handle it. It’ll give you that dignity you need. It’ll take a chunk of the stress, pain and anger out of it. Knowing you’ve got the money means you’ll be okay. In the end.

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The more cash you have the better off you’ll be

Build at least 12 months worth of your salary and keep it a high-yielding savings account. That way you know you have it if the worse case does happen. The more money you have the softer the blow. As soon as you start working, build up your emergency fund. You can never have too much on the side. Life has a funny way of throwing us curveballs when we least expect them. There’s nothing worse than your finances being caught off-guard. Especially when you’re in a really vulnerable position like a redundancy. 

Having that pile of cash will also mean you get to experiment, try out something new. Maybe wait a bit to figure out what it is you really want. Often, these kinds of scary life experiences make us question things and can force us to want a change.

My dad’s coworker had a trauma and it shook her up pretty hard. She told me dad how she’s feeling unfulfilled at work. He told her a trauma can shake us up and make us want to go for a big change in our lives. When my dad’s dad passed we moved house to a new neighbourhood. It can also help us get past it. Sometimes staying in the same place makes it all worse. She felt so relieved and told him how she’s ben sending out 30+ CVs to employers but hasn’t found anything just yet! Tight labour market? Hmmm.

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A relative of mine who sadly passed away was laid off in ’08. He worked for Meryll Lynch who went bust and had to be bailed out by Bank of America. He told us how he was escorted to the lobby with 2 bodyguards as though he were a criminal! Carrying a cardboard box with all his belongings and to never come back. To be honest, he never fully recovered from that. Job losses are tough, they take a toll but having a pile of cash means you have the opportunity to take some time to look after yourself and then start the job search or to help you till you get back on your feet without feeling like a burden on everyone around you.

We aren’t at all prepared and that’s a massive problem

A shocking poll showed almost 2 in 3 Brits said they wouldn’t be able to survive 3 months out of work without having to borrow money. This is really bad. Emergency savings are the first thing you should focus on. Before investing and before spending on whatnot. It’s literally your very own get-out-of-jail-free card. People underestimate how much comfort money can give you. Read here why you must start saving even if you have nothing to save for since life rarely goes to plan! 

We’re not prepared for a shock to our finances, like a redundancy. But if we don’t have a cash cushion for that kind of emergency, we’re leaving ourselves exposed to resorting to debt which balloons before you know it. 

What about your mortgage?

Mortgage payments are usually the biggest monthly expense so overpaying on your mortgage is a smart move if you’ll see your fixed-rate deal come to an end this year meaning you’ll see a massive jump in your monthly payments. Most lenders will allow you to overpay your mortgage by up to 10% of your remaining balance each year without penalty. 

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If you’re struggling on your debt payments whether it’s your mortgage or credit card bill, more often than not lenders will want to work with you to ensure that you’re able to pay it back. You can ask for a mortgage holiday or to not pay interest on credit card debt for a few months. If you’re known to be a reliable customer with a strong credit score and have been banking with them/using the same credit card provider they’ll usually try and work with you to some sort of agreement. 

Risk = reward but it also means risk!

The tech and start-up world comes with a massive risk. They’re not as stable as other areas. Having to spoken to people in the area, they say the key is to forever network to build your career insurance and be constantly updating your CV. Oh, and to be active on linkedin. You never know when you’ll be laid off and you don’t wanna be stuck with no plan B. Look at the share price of these tech biz to know just how volatile they can be.

Also, know the law. You might be entitled to a redundancy payment if you’ve worked for 2+ years at your ex-firm. The workers that get hit the worst are usually the ones who haven’t been there long enough to get that payout. 

Being fired is something that’s still seen as a taboo. Though if you head to linkedin you’ll see that the narrative is slowly changing! People recently laid off by tech firms from Meta to Spotify posted about their experience. Taboos only get broken when people talk about it. 

But hopefully you won’t need to be the person who has to do that. Either way, your finances will have your back.

Disclaimer: This blog is not investment or financial advice. It is my opinion only. This blog is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment.