Many consumers are facing the prospect of unemployment, reduced hours of work (called short-time working) and forced unpaid leave from their struggling employers, as the COVID-19 pandemic spreads around the globe. Big and small companies are shutting their doors or retrenching staff due to lack of or only minimal economic activity. Losing a job means losing financial security which leads to inability to pay your accounts like, your home loan, car instalment, to mention a few. Your standard of living suddenly changes and negatively affect your financial well-being.
Most of the time, when you find yourself in these circumstances financial advisers will suggest that you save the equivalent of six months' salary in an emergency fund to carry you through in case you lose your job or not able to work. You will probably need more money, especially if you have a family and are the bread winner. However, most of us do not think about this or plan for this possibility until we are retrenched.
Here are 10 Tips on what to do when you lose a job:
- First investigate how to claim for Unemployment Insurance Fund (UIF).
- Negotiate and arrange with your creditors for lower monthly payments. Don’t be afraid to inform them that you are no longer employed.
- Review and adjust your budget. Cut expenses you don’t need and only buy necessities. Make a shopping list of items needed before heading to the store and stick to it. Buy generic brands and buy in bulk.
- Consider alternative and cheaper mode of transportation or downgrade to a smaller car. Remember that cars can be expensive to maintain such as the cost of petrol, insurance, tyres, maintenance, parking and repairs. Limit using your car, consider joining a Lift Club, only use your car as the family car or make use of public transport to reduce transportation cost and save money.
- Reduce or eliminate your contract phone, subscription and internet expenses. Contact your network service provider to notify him/her of your unemployment. Find out whether you can arrange for a lower contract fee and data bundle services. Always remember to read the fine print in your multi-year contract before approaching your service provider. The service provider may impose large penalty fees for breaching or not adhering to the terms and conditions of the contract.
- Cut back on luxurious lifestyle items such as dining out, entertainment and expensive hobbies.
- Avoid buying items you don't need. Certain habits such as buying a latte before work may seem like a small expense, but it adds up to a substantial amount per month. Look at cancelling your gym membership, shopping for designer clothes and any unnecessary subscriptions.
- You can also go back home and live with your parents while you are looking for another job or business opportunities. Rent out your house to tenants and/or rent or buy a smaller apartment until you are back on your feet. Remember to prepare a written lease agreement, if you rent out your house.
- If you have children and struggling to pay the school fees, communicate with the school and make arrangements for paying the school fees. Many schools do have subsidised fees for parents with a low income. If your children are in private schools, consider moving your children to a public school if you cannot make amicable arrangements with their current school.
- Avoid using your savings, investments or retirement funds to maintain your living standard because you don’t want to deplete your funds that are needed to sustain your living standard at retirement age.
If you have any queries and for more information on consumer education messaging and activities, you can contact the FSCA at the following details:
Contact Centre: 0800 20 (FSCA)3722
