Managing Your Finances In the Face of Possible Job Loss


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Financial planning for uncertain times, can mitigate risk and bring peace of mind.

We live in harsh economic times; our government is facing serious cash-flow problems, interest rates are high and our currency has depreciated. During these times, job security may be a luxury. It is the kind of situation that financial plans are made for – to mitigate risk and bring peace of mind. Since the challenges we face are beyond our control, we need to manage what we have. This way losing the one thing that keeps us grounded – both financially and mentally won’t threaten to destroy everything that we have built.

Financial Planning For Uncertain Times

To help you with this difficult process, consider the following as bare bones needed to start managing your finances.

Conduct an Honest Financial Assessment

Essentially, take stock of your finances through budgeting – listing all your income and spending as the first step in order to maximize your money after losing your job. Initially, it may seem like a daunting task, but it will help you keep track of your actual spending. It will also help eliminate non-essential spending that will save you a lot in the long-haul.

Cut-Back on Spending

With a clear picture of how much you spend a month, you can be able to estimate how far your income/savings. This will give you an indication of how long you have until you might be required to increase your capacity in earnings.

However, before that, tactics of managing spending need to be adopted. Ask yourself the vital questions, carefully considering and distinguishing between needs and wants. Do you really need that expensive handbag or pair of shoes? Or perhaps, you can consider getting a cheaper handbag/shoe before your income kicks back again. Cutting back allows you to run an extra mile on limited funds.

Debt is the Devil, Control it!

Having a job or a steady stream of income tremendously increases your credit score and as such it would be prudent to seize the moment when you still have that steady stream of income to scrutinize your debt, leverage and negotiate for better options. As such, you can manage debt in the following ways:

  • Switching lenders to get the best rates in the market – seek lower interest rates and easier payment terms.
  • Paying off as much of the debt as you can, however, watch out for early repayment charges.
  • Paying off priority debts first such as a mortgage or rent arrears are however highly advised.

Do not take a random walk, ensure you’re covered

Nowadays more and more people are taking up insurance cover for a variety of reasons ranging from short-term income protection (in the event of job loss, disability), mortgage, loan or credit card debts to reduce risk. In this gorilla money warfare, when the odds are stacked against you it’s prudent to have all your bases covered in the event you’re asked to engage.

Be sensible and build-up some savings

Before, the potential big cut, it would be sensible to save up-to at-least three to six months of your living expenses. You can stash away your savings in an easy to access, high interest earning account. This may be a simple savings account or merely a money markets fund which most local financial institutions offer. This will help you get through until you secure another job.

Engage in money generating activities

Don’t wait until you lose your job to receive the wake-up call that you need other sources of income to tap into. Seek out other income sources to ease your financial burden for example, you can use excess capacity of what you have to generate more income for yourself, for example, if you have spare room in the house you could easily rent it out and makeup to KES 3500 per night or you could sell of unwanted items laying around the house.

If there is such a thing as the Law of Luck describing the set quantity of Luck, in which you will receive a bad fortune in the future equal to the amount of fortune you currently face, then it would be okay for me to say that the bad times only come for the season.

Therefore, take heart and solider on!

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Irene Makanga
Irene has an MBA in Finance and is an avid businesswoman, passionate about financial literacy.


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