Retrenchment doesn’t only change the way you view yourself; it also alters the relationship between you and your family. Things can go from good to bad within a short space of time. But you can do something to prevent your family from feeling the impact of retrenchment.
Tip: Ensure your debt is paid if you are retrenched. Get credit life cover here.
1. Dip into your savings
Generally, you should have enough to cover your living expenses for at least three months in your savings account. When you get retrenched, your savings should come in handy as you’re trying to ward off the impact of retrenchment on your family.
2. Get counselling
Retrenchment can be a traumatic experience. It doesn’t only affect you mentally and financially, it can also take a toll on your emotions. Your children and spouse could also become depressed and fearful when faced with your loss of income.
This is why it’s important to speak to a trained psychologist where you can speak about your fears and a way forward as a family.
3. Stay positive
It’s important that you don’t get despondent during this difficult time. Being retrenched is not the end of the world. You can view this situation as a chance to bond with your family.
Now you’ll have more time to help the children with their homework while you’re figuring out your next step. It’s also important to stay in contact with your former colleagues for motivation and new opportunities.
4. Seek financial advice
A financial adviser will be able to help you draw up a new budget, allocate funds to your debt, and pay taxes. The adviser will also help you claim whatever funds are due to you as a result of retrenchment.
Some of those funds include your severance pay, unemployment insurance fund, and retirement funds. However, you must be careful when cashing in your retirement funds.
For some people, cashing in their retirement savings when retrenched may seem like a good idea at the time, especially if they don’t know when they’ll receive their next income, says Nashalin Portrag, head of FundsAtWork, at Momentum Corporate.
When exiting their retirement fund, members should speak to a well-qualified financial adviser before they make this important decision.
Make sure you’re informed about the consequences, such as tax implications. Also keep in mind that you would have to start saving from scratch again for your retirement.
Carrie Norden, tax manager at Allan Gray, says cashing in your retirement savings should be your last resort. You’ll have to start saving again and you’ll also miss out on the full power of compound interest.
She advises that you rather transfer your savings into a preservation fund or a retirement annuity fund.
5. Cut your spending
Explain to your family why you should cut back on some expenses. Everyone should sacrifice a thing or two until you’re able to earn an income again. Only spend on necessities.
6. Seek new opportunities
Once you’ve dealt with your emotions, dust yourself off and look for other income-generating opportunities. Polish your CV and apply for jobs. You can acquire new skills by volunteering. If you’ve always wanted to start a business, this may be the perfect time to do so.
You can ensure that your family doesn’t feel the effects of your retrenchment by applying for income protection cover here.