Retrenchment: How to Financially Cope
Updated: May 9, 2022
This year, due to the pandemic, many companies were forced to cut staff, resulting in increased unemployment.
Unfortunately, this will only worsen as countries all over the world are preparing for a recession, possibly the worst one since WWII.
Companies who have already felt the pinch chose to cut costs by reducing their workforce. This has resulted in a large number of retrenchments across the globe.
If you have recently lost your job, you need to take quick steps in order to secure yourself financially.
Here’s some ways you can do to cope during this financially and emotionally stressful time.
Embrace the Change and Keep Moving Forward
Always remind yourself that you’re not alone in this.
Hearing the news of your retrenchment may cause mental and emotional distress, and that is totally normal.
In most cases, retrenchment is a last line of defence of companies to remain afloat. It was an unavoidable financial decision for your company. Thus, it is not your fault so don’t take it personally.
It also helps to speak about it. Talk to your loved ones, or to people who have gone through the same thing. The sooner you can come to terms with this, the sooner you are able to get back up on your feet and find ways to cope.
Just remember to not delve in the feeling for too long. Accept what you can’t change and plan your next steps.
Review Your Resume and Begin Looking for Opportunities
Now that you have mentally and emotionally managed the change, focus on what you can control.
Start updating your resume and your LinkedIn. Make sure recruiters are aware that you are available and looking for immediate opportunities! You should also be actively browsing various job portals like Jobstreet, Jobsdb, and Indeed.
And if you haven’t already, tap on your network and reach out to friends. Find out if they know of any opportunities available.
Review Your Retrenchment Packages
It is crucial to know what kind of retrenchment package your company is offering you, and how long this will last. The sooner you review and understand it, the better you can ask human resources about it if you’ve got any questions.
Once you’ve interpreted this, use it as your temporary cash flow and plan out your finances for the next few months (or until you start having a stable income again).
Doing this is key, as it gives you an idea of how long you’ll be able to manage without a monthly income. It also helps to know whether or not you have to tap on your emergency fund during this period of unemployment.
Before officially leaving, check if you have any due bonuses, and ask if you can get part of it.
Scrutinise and Revise Your Monthly Expenditure
In order to effectively plan your budget, you need to draw up your monthly expenses.
Once you’ve done that, go through them and analyse each item. Categorise them into items that are necessities, such as money for transport and food, and separate those that you don’t necessarily need, such as Netflix or Amazon subscriptions.
You can take a look at your internet and telco plans as well, and opt for a more affordable option in the meantime.
You should try to cut down on other luxuries like shopping or beauty expenses -- delay them if they’re not urgent or essential purchases.
Keep in mind that you don’t have to cut these out of your monthly expenditure now. However, it’s good to note which items will be first to go should you need to be more thrifty in the months to come.
Be Open To Alternative Opportunities
In the last five years, remote workers have steadily grown by 44% in the US alone, according to this website. This will be an emerging trend in the next coming years.
Thus, this is a good time for you to upskill and venture into other opportunities that can be another source of your income.
Take on project-based roles or even consider freelancing so you have additional streams of income during this time. A lot of companies are looking into hiring employees that are home-based, some even only needed part-time, so jump at these opportunities!
To do this, take some time to figure out what you’re naturally good at, or what skills you have that you can offer as a service.
Build your portfolio by collecting all your previous work, or by creating passion projects. Go into job-seeking channels such as Upwork, LinkedIn, or even FB groups in your local community.
Talk to A Financial Advisor
At a time like this, talking to a financial expert can be most certainly helpful to make sure your personal finances are in order.
Besides having a wide understanding of the market, they can also help you draw up a long term financial plan that you can envision easily.
Making good financial decisions takes time, and a financial advisor can help you speed up that process.
If you need help, we can put you in touch with a financial advisor who will be able to help you make the best decisions during this difficult time.
Written in collaboration with our financial advisory partners at Virtus Associates.