Preparing For The Worst Case Scenario – Losing Your Job
In the current economic climate and with a precarious job market out there, a lot of people are not feeling very secure in their jobs. All of us are aware at one time or another in our lives that our employer may need to make cutbacks; we just always hope it is not us that has to go. But all of us, no matter what job we do, should prepare for that worst case scenario, particularly if we have a family depending on our wage. No one wants to get fired but it does happen. Just like that proverbial rainy day, there is no harm in preparing to lose our job even if it never actually happens. This article will look at a few ways to prepare and to soften the blow, by putting in place your own employment protection plan:
(1) Make Sure You Build Up Decent Cash Reserves – Every month you should try and put a little money aside for an emergency fund. The aim with this is to build up enough money in the reserves to support your family for anywhere between three and six months. Keep half of it in the bank and half of it at home somewhere safe. This allows for the worst case scenario of something happening to the financial institution you bank with. Having that money put aside will massively reduce the stress of any unexpected problems at work and you will be thankful you had the foresight to do it.
(2) Build Up Reserves of Groceries – Every time you go shopping, buy a bit extra and build up a supply of long-life groceries in your garage that you can use if money gets a little tight. Make sure you constantly check the dates, as well as using and replacing stuff as the months go on. Just having a month or two worth of food shopping in reserve provides another reassurance against that employment rainy day.
(3) Bank Up Your Vacation Time – If you can go without a holiday for a while then it is worth including banked vacation in your employment protection plan. A lot of companies will now permit you to bank anything from a week up to two or three months of holiday time. You can work out how much this equates to in dollars and make it part of your back up.
(4) Don’t Commit to Long Term Deals – This could be anything from gym memberships to book clubs to cable deals. If times are getting tougher, avoid committing yourself to long term expenses that will be difficult to get out of.
(5) Clear Your Debts – As with the idea of building up cash reserves, you must also make sure you don’t build up large debts on credit cards and store cards. Clear your debts before you start saving your cash reserves as there is no point in having money sitting in the bank whilst you are paying off higher interest rates on debts.
(6) Set Up Part-Time Passive Income Streams – If you have the time, set up a blog, invest in a rental property, write an e-book or do a bit of freelancing on one of the web’s many job sites. Make it something you enjoy and don’t put pressure on yourself to make a lot of money – the idea is to slowly build an alternate income. But never do this at the expense of your main income; you don’t want your backup plan to cause you to lose your job!
Esther is a financial blogger. She writes about everything from small business advice to financial software and from taxes to mortgages. She also writes a blog for an Illinois accident law firm.