I sincerely hope that you’re reading this out of an abundance of caution to prepare for any possibility, and not because you were actually retrenched or furloughed. If it is the latter, my first message is to stay strong, keep your spirits up and know that this too will pass.
Rather than tackle the aspects of employee rights in a retrenchment like some articles, I wanted to focus on the financial aspects of building up defenses early if you’re employed, the steps to optimise your financial situation if you are laid off and ideas to get through to the other side.
I’m employed but worried having read news of all the job losses
If you’re reading this just in case, congratulations. Preparation is half the battle won. Focus on these following areas:
- Keep calm, and focus on doing your best at work;
- Build up your emergency savings fund. If you haven’t started, time to really put cash aside is now. If you have one already, time to build it up even further. This emergency fund should not be invested in anything other than cash or short term deposits;
- Counter-intuitively, if you are currently employed and do foresee a need for cash soon, consider preemptively getting financing to bridge that period. Banks won’t want to lend to you once you’re in desperate need of cash, however back-to-front that may sound. It’s just basic risk management on their end; and
- Further points that’s applicable to all situations below.
I’ve been laid off, now what?
If you have suddenly been laid off, first of all know that it is normal to be emotionally upset. Process that, and then focus on matters that you can control with regard to your finances.
- Speak to your ex-employer about what form of support is available;
- Look into any government programs or unemployment benefits that you may be eligible for. In Singapore, these may include the one off S$600 Solidarity Payment, S$300 in grocery vouchers, special S$3,000 WorkFare payments, S$300 for union members, S$800/mth cash grants by social service offices, and ComCare. Check out what’s available in your country of residence;
- Dust off your resume, update it and check out new employment opportunities via LinkedIn, job portals and even the government’s Virtual Career Fair; and
- Besides looking at getting a replacement job, figure out if there’s any opportunity to do contract or part time work related to your previous work experience. Are there opportunities to consult or offer services virtually? Maybe you can give tuition online? Food or grocery delivery or work in the logistics business?
General points to consider for everyone reading this:
- If you have debt, look into avenues currently being offered to restructure high interest loans like credit cards into term loans which have lower interest rates. Covid-19 is affecting broad segments of society so governments and lenders are willing to lend their support to ease the burden. Also consider looking into home loan payment deferments if available and suitable for you. Remember, right now cash is king so you would want to hold on to as much cash as you can for your essentials;
- List down ALL your expense items. Categorise those expenses into essentials vs non-essentials. IMMEDIATELY cut off the non-essentials where possible (some might be contractual like a telco or gym membership, in which case perhaps try contacting the service provider to negotiate a deferment but read the fine print as there could be fees or charges);
- Look into your balance sheet. First point above was to look at your liabilities, so now consider what are your assets? Are all those assets really assets or is it draining cash, such as a car? Consider how essential those -ve cash flow assets are to your personal needs and if there are alternatives – perhaps consider letting it go, although this might be easier said than done because market prices could already be depressed due to the economic outlook;
- For assets or investments that you hold, what is your financial plan with regard to those? Long term investments or short term trades? Have prices recovered recently such that you can consider liquidating at a decent price? Selling at a loss is painful, but if you need the cash, it might be better to sell early than be forced to sell much later at distressed prices. Kind of like (optimistically) setting asking prices for an investment property just above the market price, which may continually decrease in a down market. Then you could get stuck chasing it down;
- Alternatively, consider monetising some assets like renting out a spare room (I know, after the circuit breaker is over);
- Hold on to the good assets and stay calm; and
- Be grateful and count our blessings for whatever good we have in our lives – good health, family, friends, food, the internet, whatever! It helps to put things into perspective and puts our minds in a better place to get through tough times.
Safe investing and safe distancing everyone!
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