Bode and Chioma Davies have three children aged 14, 12 and 7. Chioma is expecting their fourth child. The pregnancy has been somewhat challenging, and she has had to give up her job.
Bode is a senior manager in a bank. He is well paid, but their costs are extremely high; they live in a three-bedroom apartment in Lekki Phase I and their children’s school fees runs into millions of naira each year.
Bode’s family is totally dependent on his income, which is already stretched as he also supports his extended family; his parents and two siblings. So, you can imagine the shock when he got to work some weeks ago to find that he had been locked out of the system without warning. He never saw this coming!
For the next two weeks, Bode got dressed and left home every day to go anywhere. He was too embarrassed and distraught to tell Chioma that they would have to move from this apartment as rent was due, the brand new jeep he had leased would be repossessed as he couldn’t keep up with the monthly payments, and the children would have to leave their school. Bode lived from month to month and had no savings or investments.
These days the term “job security” has become obsolete and long-term employment is not guaranteed. Job loss ranks as one of life’s most challenging events. It would be so much easier to deal with such events if you are prepared financially by planning ahead for emergencies or unexpected events. But even if you failed to anticipate this sudden change in your circumstances, here are some practical steps to take.
Try to remain positive
Apart from the financial issues associated with job loss, there are usually emotional aspects that are often ignored. Whether yours was the only position that was cut, or an entire unit or department, the feelings caused by being laid off are largely the same, regardless of the circumstances. Many people experience a loss of self-esteem, a sense of failure, and depression after retrenchment. It is important to take your next steps based on clear rational thought; devoid of emotion. Try to remain calm, and do not rush into any major decisions while you assess your situation; you need a clear, positive outlook.
What are your entitlements?
If you are fortunate enough to receive severance pay or other benefits, use this as a bridge to tide you over the difficult period. Spend carefully, and do not use all of your entitlements to make large payments, such as to pay rent or your mortgage, as you might have to live off that money for an extended period of time. Don’t let such funds lull you into complacency; you need to actively seek a new job or other income-generating opportunities.
Revise your budget
Do you have any savings? How long will it last based on your monthly bills? The importance of an emergency fund becomes glaring in situations like this. If you have been able to set aside, say, six months of income in a money market account, you will be able to pay some of your bills and relieve some of the financial stress while you look for a new job.
How best can you adjust your budget to suit your new circumstances? Develop a new budget that will cover several months based on what you have saved and any expected income. How much will it cost to maintain your family, your home, and your lifestyle? Keep your family members fully in the picture so that they too can adjust their expectations. You will have to control your spending by cutting back drastically on non-essential expenses and seeking cheaper alternatives.
Do you have to continue to live in a neighbourhood that you cannot afford? Remember the most expensive school is not necessarily the best. The best school for your children is one that you can afford and gives them a strong basic foundation.
Determine which costs can be eliminated, reduced or deferred. Naturally, your priority will be for rent, school fees, food and utility bills. Of major concern will be the lack of access to affordable insurance and appropriate healthcare. Try to avoid a lapse in your insurance policy.
Be cautious about borrowing
Try to avoid borrowing except where absolutely necessary and only for critically important expenses that cannot be delayed. Taking on additional debt can keep you in denial about your true financial situation and make things worse.
If you are unable to fulfill your financial obligations, such as paying your rent or mortgage or repaying a car loan, contact your lenders immediately, and inform them that you have lost your job and are actively seeking new employment. It may be possible to negotiate new terms and come to an arrangement to adjust your payments for a limited period of time, particularly if you have always maintained a respectable credit standing. It is better to approach them upfront rather than fall behind with your payments. If you default on your home or vehicle loan, your bank will take steps to repossess your property.
Stay socially connected
Some people feel embarrassed or inadequate after losing a job. Don’t withdraw; you need your network now more than ever before. Reach out to family, friends, ex-colleagues, church and club members to spread the word that you are in the job market. They may be aware of opportunities for you. Carefully update and circulate your CV.
Seek alternative sources of income
With the current unemployment numbers, you need to cast your net wide. Don’t pigeonhole yourself into a specific role or job. Be practical and flexible and don’t scoff at roles that are beneath you or don’t align with your credentials, qualifications or experience. Consider temporary or part-time work that will generate income and give you the flexibility to actively pursue a more permanent position. This may be a time to upgrade your skills if you can afford it and if it would enhance your resume and prospects. It’s the time to look critically at your hobbies, talents, skills and passions; they can be converted to a business and offer real possibilities for income.
As difficult as this may sound, try to view this period of unemployment as a positive event, an opportunity to re-evaluate your path and potentially change career or start your own business. This may well be the impetus, and just what you need to take a fresh look at your life and to redefine your goals. Often, it is times like this that propel people to greater heights.
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