Redundancy

Redundancy and You

Redundancy has numbers for the past 2 years have jumped 300 per cent compared to a decade ago. If you were made redundant, you will inevitably suffer a sense of loss, anxiety and insecurity. During this period, it is important to manage both your emotional and financial well-being.

 
What Can Planning Achieve for You

Anxiety comes from not knowing. If you have no idea how long can your savings last or whether you can still keep your home, you will certainly be overwhelmed with stress. Planning your finances gives you the focus you need. Once you establish a sense of control, you can concentrate on your next career move and maintain your longer term financial goals. Planning for the transition period will help you to:

~ Make the most of your redundancy package via tax strategies and structures
~ Manage cash flow to meet living expenses
~ Manage your debts and tax liabilities
~ Identify the critical deadlines for major decision making
~ Evaluate what you have lost, assess your financial standing and plan for the future

 

Dealing with Redundancy

~ Redundancy Package and Your Tax Liability
  Upon receiving your redundancy package, you want to maximise the benefits paid to you. Your redundancy package could be made up of any number of components, some of these components are taxable and there are more tax implications depending on your choice of action with the package. It is convenient to look at the tax consequences of a financial decision as being unimportant as you can deal with it later. However, postponing the effects of a taxable decision may have significant impact on your subsequent cash flow.
~ Stock Options and Other Profit Sharing Plans
  Stock options and other stock plans have their own exercise prices, holding periods, policies, restrictions and tax implications. If you hold a stake in the company in the form of stock plans, it is important to gather all such information and take note of all applicable deadlines.
~ Mortgage and Other Debts
  Your mortgage and other loans are likely to be your biggest financial drain. Assess all your debts and evaluate the cost and benefit of refinancing major debts to ease your cash flow during the transition period.
~ Cash Flow Management
  Can you still continue your lifestyle? Can you pay your loans? How long will your money last? You will not have answers to these questions unless you itemise all outflows of funds and set a realistic interim budget for at least 12 months.
~ Investment Review
  You should review your investment portfolio, reassess your risk tolerance and rebalance your portfolio if necessary. During the period of transition, you should adjust your investment portfolio to provide you with greater liquidity and security.
~ Critical Dates
  Identify your critical dates to help you make major financial decisions. In this way, you can better manage panic and avoid untimely liquidation of your assets.

Redundancy is one example of hurdles which may disrupt your pursuit of your financial goals and lifestyle dreams. It also highlights the importance of setting in place a personal financial plan that can absorb interruptions. Your personal financial plan should meet the dual objectives of helping you achieve your financial goals with greater certainty and helping you overcome obstacles.

A competent financial adviser can help you put in place a financial plan that can accommodate changes or setbacks while it continues to produce good results. He/she will ensure that you have the plan that is appropriate for your current circumstances and future lifestyle goals.

Start planning early in partnership with your financial adviser, you can organise your finances and stay in control of your financial future.

 
 
 
 
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