Losing your job
Losing your job can be stressful and places a strain on your personal finances. Even if you’ve received compensation from a redundancy payment, losing your job can impact your ability to keep up with your financial obligations. Having a plan in place can make a difference on your financial and emotional well-being.
- Keep your family in the loop
Keeping your family up to date with what’s happening is an important part of the process. When your partner, children and other family members understand the situation, they can be a valuable source of support as you make the adjustments to your situation until you find a new job.
- Draw up a budget to cut spending
A good first step is to develop a budget so you can manage or reduce your spending until you find another source of steady income. Things will be a bit easier if you have savings or if your partner is working, but it usually makes sense to cut or reduce unnecessary spending.
Make a list of essential and non-essential items, then prioritise your needs and wants and look for any unnecessary expenses you can cut to save money. Be prepared to make changes to your lifestyle. You can use our budget planner to get started. Rent, mortgage, utilities, insurance and food are typical essential items. If possible, repay your credit card bills and other loans promptly to avoid additional fees and other consequences of falling behind on your payments.
- Try to avoid the temptation to tap into credit, but if you must, before you borrow, make sure you can afford new debt payments on top of your current expenses or commitments, and avoid unnecessary multiple sources of credit to keep an easy track of repayments. Read more to check if you can afford to borrow.
- Do you have a serious budget shortfall? Talk to your bank and any other organisation you owe money to and contact them as soon as you can, especially if the lender has security over your home, car or other assets. Tell them you're having financial difficulties and want to discuss repayment arrangements. Check out what to do if you’re experiencing debt trouble.
- Check your benefits
You may be eligible for severance compensation from your employer. Check your employment contract, or check with your former employer’s human resources department to see if compensation is due. In some cases, a lawyer may be useful in ensuring you get what you are owed.
If your former employer had a health or other type of benefits plan, your coverage may continue even after your employment ended. If you’re unsure of the details, ask your former employer. Some companies provide outplacement services to employees made redundant.
- Review your insurance coverage
In case you’re no longer protected by any insurance plans your former employer provided, you should review whether you need to purchase any insurance policy to ensure adequate protection in the interim period, particularly if you had not purchased any health insurance policy on your own. Medical expenses can be extremely high and it is wise to ensure sufficient protection at all times.
If you already have an insurance policy and stop paying the premiums, it could lead to a termination of your insurance coverage. Learn more about insurance.
- Review your investments
Take a look at your investments and see what can be easily liquidated without penalty or too much cost in case you need access to funds. If you cannot afford to lose money, now may be the time to liquidate riskier assets.
- Consider education and retraining
Many people use redundancy as an opportunity to retrain and develop news skills that will enhance their employment prospects. There are many options available, including online courses, attending a college or taking an industry course. Assess your needs, and then determine which course is right for you. You may be eligible for industry loans, grants and scholarships. The Vocational Training Council is a good place to start exploring retraining options.
You can also fund your studies through personal savings, family funds, commercial loans or credit, or by applying for Government’s financial assistance. You might consider the Continuing Education Fund (CEF) which provides subsidies to adults aged between 18 and 65 who wish to enrol in continuing education and training courses. Successful applicants receive 80% of their fees or a maximum sum of HKD10,000, whichever is the less, upon successful completion of a reimbursable course. For details, you can visit the CEF website or enquire through hotline (852) 3142 2277 for details.