Losing your job could lead to significant financial uncertainty. If you are facing the threat of redundancy, or have recently been made redundant, assessing your financial priorities can be a good way to regain stability and control.
Working out how much money you currently have, and what your monthly expenses are, can help you to determine what your next steps should be.
First, make a list of any income, savings and investments you have. Then create another list of all your monthly outgoings – but remember that redundancy will impact your expenses, both positively and negatively. You may save on some costs, such as commuting, but could also have new expenses to consider, such as travelling to job interviews.
It’s also a good idea to get in touch with HMRC to check that your tax payments are up-to-date. This will reduce the risk of any surprises later on.
Once you know how much money you have at hand, and what your monthly expenditure is, it will be easier to work out whether you have sufficient funds to cover your outgoings while you determine what you want to do next.
If you’re concerned about not having enough money to cover your financial obligations, then it makes sense to try to prioritise your expenditure.
Start by working out which payments are more important than others. For example, your mortgage and car insurance payments should take precedence over a gym membership. Of course, what you prioritise will depend on your circumstances, such as whether you’re married or have any children.
Also, check whether you have any insurance to cover redundancy, such as payment or income protection on your mortgage or other loans. You may also wish to claim any benefits that you’re eligible for, including Jobseeker’s Allowance.
When your household income is reduced as a result of redundancy, it may also be worthwhile reviewing all of your outgoings to make sure you’re getting value for money.
Check that you have the best deal on any of your regular bills, including:
You could also consider the option to take ‘payment holidays’ on outgoings such as a mortgage or other loan. Check with your lender to see if they offer an option to stop making your payments, or pay a reduced amount, for a period of time. Be aware that interest may still be accrued during this period and that these options could increase the amount you’ll need to pay over the longer term.
If you receive a lump sum as part of your redundancy package, take time to consider how to use it most effectively. Leaving it in your current account may not be the best option – it’s easier to spend and the money may not earn as much interest as it could in a savings account.
You may also want to consider paying off some debts, since the interest rate on borrowing is typically much higher than on savings.
To understand your rights, including whether you are entitled to redundancy pay, read our Redundancy – what you need to know article.
Our website also provides some helpful guidance on dealing with redundancy.
One of the first things you should do if you’re made redundant is contact your bank. To help you work out your next steps and start getting back on your feet, Lloyds Bank offers a Helping Hands service. Just visit your local branch, or call us on 0345 300 0000.
If you face any financial challenges as a result of redundancy, you can speak to the Citizens Advice Bureau for free advice.
To ensure remaining sources of income are being taxed correctly, contact HMRC.
If you’re worried about debt, you can contact the National Debtline.
The Money Advice Service offers guidance on effectively managing your money if you’re made redundant.
The Government website provides a benefits calculator which can tell you whether you’re eligible for any benefits.
You can also use our handy Budget Calculator.