Taking firm steps quickly to reorganise your finances can help lessen the impact of losing a job. Find out how to manage your money through this period, and where to get help if you need it.
Losing your job can be a traumatic experience. When your income gets completely cut off, being able to tap emergency savings will soften the blow. But what if you have no emergency funds to dip into?
The best way to tide over the period of unemployment is to be clear-headed, pragmatic, and disciplined about your finances — and make any changes swiftly.
What you should do
Here are a few steps you can take:
1. Draw up a budget
Make a list of things you need to spend on, such as groceries and utility bills. Set aside enough for these expenses and stick to it. Use a Budget Calculator to help you.
It is important to cut out luxuries, such as dining at restaurants and taking taxis since it is hard to tell how soon you will have income again. Making changes to your lifestyle is crucial to stretch your savings.
2. Be prepared to take drastic steps
If it doesn't look like you will find a job soon, and your savings are emptying fast, you need to take a long, hard look at whether to get rid of bigger liabilities.
For example, if your car loan repayments are crimping your budget for daily living expenses, think about selling it.
3. Re-prioritise your financial goals
Saving up for your children’s education or your retirement? Remember: Your children can always apply for student loans.
4. Watch out for the interest that you are paying
You'll have to pay high interest charges if you can't keep up with settling your credit card bills or instalment plans. If it is unlikely you will be able to settle your credit card bills, stop using it.
You may need to restructure some of your debts. Talk to your lenders quickly to do this. Go to Credit Counselling Singapore for assistance if you need more help.
5. Review your insurance policies
If you have life insurance policies, ask your financial adviser what options you have. You may be able to:
- Take a premium holiday
- Take a loan against your policy’s cash value (if any)
NoteNote: These options will pay for the premiums to keep your policy in force but interest will be charged. You should not rely on this for an extended period.
You can also ask your financial adviser if you can do one of the following:
- Convert your policy to a fully paid-up one
- Reduce the sum assured
If you don't take up any of these options and simply stop paying premiums, your coverage could be terminated. If you apply for coverage later, you may have to pay more, or may be ineligible if your health has changed
6. Liquidate your assets
See which investment can be liquidated without penalty or too much cost if you need urgent access to funds.
If you cannot afford to lose money, now may be the time to liquidate riskier assets.
These measures may seem tough at first sight, but they can help manage your finances during this time.
7. Set aside for emergencies
When you find employment again, make sure your priority is to rebuild your emergency savings. Always aim to keep three to six months of your salary as savings at all times.
Some of us may not have existing savings or assets to rely on. If you need help, you can approach the following organisations:
Workforce Singapore's career matching services can assist you in needs assessment, career profiling, training opportunities and job-matching to help you find suitable jobs.
ComCare provides social assistance to low-income individuals and families. Depending on your needs and eligibility, you may receive short- to medium-term help or fee subsidies for children from low-income families who are placed in childcare, kindergarten or student care centres.
See also: Managing your debt