There are certain years that stand out in people’s minds while others tend to blur and fade into each other as time passes. Due to COVID-19, 2020 will be one of those memorable years that will be talked about for decades to come.
Apart from the devastating impact of the pandemic on people’s health, its economic fallout is also significant and will be felt for a long time. Lockdown has been hard on businesses worldwide and many have been forced to retrench staff. If you’re dealing with being retrenched, it’s important to remain calm, understand your rights, and consider the options available to tide yourself over financially until you are able to start earning again.
If your employer was contributing to the Unemployment Insurance Fund then you are entitled to lodge a claim for unemployment benefits.
While finding a new job may be your top priority, it’s also vital to be proactive in developing a plan to manage your debt – and the sooner the better. Get in touch with your creditors straight away and explain your situation. Discuss whether you can apply for a payment holiday or if they are willing to extend the term of your loan. Many people are unaware that most loan repayments actually have a credit life insurance policy attached to them that repays the lender if you pass away or become disabled; some may also include a retrenchment benefit so it’s definitely worth investigating.
Depending on your contract and how long you worked for your employer, you should receive a retrenchment benefit as a lump sum payment. This, along with emergency savings you may have, can be an important safety net for the months ahead if managed carefully. Once you know how much money you have and have made plans with your creditors, you can work out a new budget.
Work your way through all your expenses and see where you can trim things down. Small savings can add up quickly and make a big difference over time.
It may be best to avoid accessing your retirement savings at this stage, as it could impact your retirement planning negatively and have immediate tax implications.
If you need help adjusting your financial plan you should consider talking to a financial adviser. Old Mutual Financial Advisers are able to offer expert advice and guidance no matter what your financial situation and could offer solutions you might not have known even existed.
It’s important to remember that things will get better. And, with careful planning, solid advice, and maybe a little help from family and friends, retrenchment doesn’t have to derail your long-term financial goals.