During a recession it only natural to have concern about losing your job – and, as a parent, you will no doubt be worried about your responsibility and household income. Redundancy can come out of the blue – but more often there are warning signs. Management might make an announcement or you may simply hear on the grapevine.
You can lessen the worry of redundancy by being prepared and sorting out your finances, so that you are ready to cope if the worst happens. Even if your job is safe, you may find your pay being frozen or your household budget being stretched.
If you’ve been made redundant – or are worried about job security, then a practical thing you can do is to look at your finances, and try to make them as recession-proof as possible. The key is to be honest with yourself and communicate with your family. Dealing with your money will make you feel more in control of your situation.
Budget
A proper budget will help you understand where your money budget goes – and then you can prioritise and cut back on unnecessary luxuries. Don't make the mistake of just thinking about a month's spending – remember events like Christmas and the Summer Holidays which can mean additional expense. Also factor in big, one-off expenses.
Work out your debts
Debts can be a nightmare to deal with if you lose your job. Look at what you owe, work out what you can pay off, and make sure the rest is as cheap as possible. If you have savings as well as debt, consider paying off the debts. This is usually the most sensible option, as the cost of debt is so much higher than the amount of interest you earn in savings.
Rainy day fund
You should try to keep a cash emergency fund to see you through any difficult times. You will want to be able to pay the mortgage or rent if you find yourself out of work. Think about setting up a saving fund that you automatically pay a little into on payday each month – it may mean making a few sacrifices now, but having a reserve will help you to worry less about the possibility of losing your job.
Useful links: