By: Joni Boyd
How do you feel when you hear the word ‘redundancy’?
For many of us, it strikes terror and brings a sense of insecurity.
Thankfully, it’s not actually all bad, says accountant Pete Burrows discuss in this episode of the Money: Faith and Finance podcast.
Firstly, it’s important to understand the difference between ‘retrenchment’ and ‘redundancy’.
“Retrenchment is generally more specific to a person, while positions get made redundant,” Pete says. “[Redundancy is] nothing personal from your employer, and it also isn’t any kind of punishment or judgment by God – it’s a fact of life.”
Redundancy has become increasingly common across various industries, affecting individuals at different stages of their careers. Thankfully, there are a few things you can do, to ensure a redundancy turns out better than you may have initially expected.
1. Start taking action right away
There are a few things you’ll need to do right away, Pete advises:
- Start looking for new job opportunities immediately
- Consult financial professionals before you receive your redundancy payment
- Consider budgeting your redundancy payment as a wage
2. Be mindful of tax and your financial future
Pete says there are a few different things to keep in mind, when it comes to tax:
- Make sure you understand the tax-free components of redundancy payments
- Strategically plan the timing of your redundancy to maximize tax benefits
- Engage with a tax professional to ensure you’re making the absolute most of your payment
3. Take care of yourself
It’s important to take care of your mental health, when sudden change happens, by utilising healthy coping strategies and finding new opportunities for growth and professional development.
There’s no doubt about it, redundancy can deeply affect one’s identity and emotional well-being. During this time, it’s vital to seek support. Consider viewing a redundancy as an opportunity rather than a judgment, Pete advises.
4. Make thoughtful financial decisions
“It’s important to think of redundancy payments as wages and not just spend it all at once,” Pete says.
Options for careful use of a redundancy payment include:
- Pay off high-interest debts
- Top up superannuation
- Invest the funds wisely to ensure financial stability
As well as careful management of a redundancy payment, Pete says there are some essential financial tactics which can make all the difference, such as:
- Leveraging tax advantages
- Consulting with financial professionals early on
- Making timely decisions to optimize your financial situation
It’s refreshing to know that a carefully managed redundancy can in fact be a good thing.
“I’ve seen some clients get made redundant and then after some time, say it was the best thing that happened to them,” Pete says.
Article supplied with thanks to Hope Media.
Feature image: Photo by Andrew Neel on Unsplash
About the Author: Joni Boyd is a writer, based in the Hawkesbury Region of NSW. She is passionate about the power of stories shared, to transform lives.