One of the questions on everyone’s mind is what 2021 is going to be like financially. It wouldn’t be irrational to worry, given the numerous financial Doomsday speculations everywhere in the media. Trade wars, sanctions, and retaliations dipping oil prices and the like; analysts spell a gloomy future. Whether or not a global recession is on the horizon is not of significant concern, what matters is whether you will sail through or not.
The first punch of a recession is massive layoffs and furloughs. If you a find yourself in a situation where the company has to lay off workers to cut losses, what would be your next move? Admittedly this can be a scary situation, but life would have to go on. Whatever 2021 brings, below are the financial preparations you can put in place to survive.
Cut Down on Spending
Slimming down your expense budget is a perfect way to prepare for the rainy days ahead. If you see tell-tale signs of layoffs in your organization you can start by canceling or downsizing your cable bill, gym membership, entertainment, and restaurant dinners. You can create a new “survival” budget that only includes basic needs. That includes food, shelter, medicine and child care.
You might have been using your savings to pay debts or plan for vacations. However, in the event of an economic Armageddon, having a roof over your head deserves priority. That implies that you have to fatten your savings. Start paying the minimum required on your debts while saving a majority of your income for the day when you will not have a paycheck. Your savings should be able to sustain you for at least two months without a job.
Brief your Creditors
It is not wise to suddenly default on your debt without first warning creditors of the layoff. The earlier you can apprise them of the situation the more likely they can agree to revise your plan. Many creditors have repayment plans that include reduced interest rates or reduced installments spread over a long time. Especially after getting burned in the 2008 recession, most banks are keen to work with you to help explore options to prevent foreclosure.
Make One Last Draw from your Employee Benefits before you Clear your Desk
Go for the last-minute check-up, get eyeglasses or lenses and get your teeth checked and cleaned. One final draw from your employer-paid health care plan might help you sail through the period of joblessness before you get a new job or start a business that will support your healthcare needs.
Hopefully the season you spend pounding the pavement will not be too long. On the same note, also inquire with HR what would happen with your other benefits when you leave. Some companies allow employees to take with them long term insurance. The moment you are out of your job, however, you will be obligated to pay for the premiums individually.
Find Out what you can Get with your Unemployment Benefits
Every state or country has its stipulations and qualifications for unemployment benefits. Find out how much is offered as the benefit amount and for how long you can receive the benefits. It is important to factor the unemployment benefits in your budget – the support can save your bacon, so you can still pay your bills on time as you look for another job.
Getting the axe can be a traumatic affair. Financial preparation is necessary to be able to sail through the hard times ahead. But if you take the precautions listed above, you’re sure to soften your landing.