How to protect your finances after redundancy

Understanding your redundancy payout

According to ASIC, a redundancy payout can be made up of any of the following:

  • a severance payment

  • an incentive payment

  • a payment in lieu of notice

  • unused annual leave and long service leave.

How to protect your finances after redundancy

Regardless of its makeup, in most cases you’ll get a lump sum when you finish your role. The amount of the payout will likely vary depending on how long you’ve been with your company, and will be taxed accordingly.

It can be helpful to sit down with a financial expert and explore your options. Keep in mind key dates, major debts or payments, and whether you can afford a break before looking for work.

Depending on where you are in your career, a redundancy payout could be a blessing in disguise. It can sometimes provide you with a financial buffer to explore other opportunities.

Managing your spending habits

Redundancy can give you a certain amount of freedom, but you may still need to adjust your spending habits. Without any income, you should consider revising your necessary and unnecessary expenses.

  • Weekly budgets can help manage your day-to-day needs.

  • Consider yearly budgets for the bigger costs such as mortgage payments, school fees and holidays.

Just remember that reworking your spending habits doesn’t have to mean restricting your lifestyle. Figuring out what you’re happy to compromise on is a great place to start.

Dealing with debts

Depending on the size of your payout, you might find it hard to keep up debt repayments on things like your home, car, or school fees. If you’re finding it tricky, there are a number of ways we can help.

The important thing is to act quickly and not simply avoid making payments. That could be where you’ll run into trouble.

Reviewing your contractual rights

You can learn more about your redundancy rights and entitlements under the 2009 Fair Work Act.

If you believe that you’re being paid an amount less than what was agreed in your contract, or less than what the Fair Work Act indicates, seek out legal advice or contact the Fair Work Ombudsman directly.

Planning ahead

Unless you’re looking to move into retirement, it’s important to plan your next career move. If you’re having challenges re-entering your industry, it might be a good idea to look into education or retraining opportunities. The Department of Human Services may be able to provide services to assist you to update or change your skills

There are also plenty of legal, financial, employment and mental health networks and services available in Australia that can help you.

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at <insert direct link>

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Authorised Representative 298494
Interprac Financial Planning Pty Ltd 

Darryl Jopling

Senior Adviser

I have worked in the financial services industry since 1982 and as a Financial Adviser since 1999.

I have worked for large Financial Planning businesses, Membership based organisations and looked after the financial planning needs of clients within an Accounting Practice before starting my own business.

I am married, have 4 older children and a grandson and I am keen golfer with mixed results like many .

I have been through many of the strategies I talk with clients about myself and with my family.

I have been through the journey of seeing my parents move into Aged care and negotiated the difficulties and pitfalls of understanding the system for them and this gives me an excellent insight into what is required to assist families at this difficult time.

In a previous roll I used to run retirement seminars looking at Centrelink and Retirement Incomes and how to make these work for you. I have helped many of my clients with Aged Care advice when their parents needed to move into Nursing Homes. For many clients I assist them with superannuation, building wealth and protecting their loved ones with insurance.

I am supported by his, Licensee, Interprac Financial Planning’s in-house resources and ongoing technical, systems and training.

I am committed to understanding your needs and identifying strategies and products to help you achieve your goals.

My guiding principle as an Adviser is to design plans which help to provide my clients with clarity of purpose and the opportunity to build a solid financial foundation.
I will take the time to listen, explain things clearly and keep you informed throughout the advice process.

My experience is complemented by professional qualifications including:

  • Certified Financial PlannerTM Professional
  • Diploma of Financial Planning

At Choice Financial Advice we work with you along the way on life’s journey.

Whether you are getting married, starting a family, embarking on the trip of a lifetime, planning to enjoy your years after work or assisting elderly parents with Aged Care and Nursing Home placements, we can help.