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How to manage your finances if you’ve been made redundant

  • Sharon McDougall -
  • 19th June 2020 -
  • 2 minutes to read

If you’ve been made redundant, you may be entitled to receive redundancy pay if you’ve worked for the same employer for two continuous years. The amount you receive depends on your age, length of service, and final wage, but it can be a crucial lifeline during the coming months.

Managing your finances after redundancy is a daunting prospect, however, so what steps can you take to stay in control?

Make a budget

A major part of managing your finances is making a detailed budget so you understand where your money goes - doing this will give you a clearer picture of your overall financial position.

You’ll need to gather together all your bills, bank statements, credit card statements, and documentation on any savings and investments that you might have, and calculate how much you need for your essential living expenses such as rent, mortgage repayments, and other priority bills.

Inform your creditors

If you let your creditors know you’ve been made redundant as soon as possible, they should be more willing to offer a reduced repayment plan for a while. Dealing with priority debts first is crucial in keeping a roof over your head, however, and your budget will help you calculate how much you can pay to each creditor.

It’s worthwhile checking for any mortgage payment protection insurance, or other insurance policies that you might have taken out in the past, as you may be able to make a claim that gives you a little breathing space.

Reduce your outgoings

Go through the direct debits and standing orders on your bank statement, and identify where money can be saved. You should cancel all non-essential regular payments, and could potentially lower utility and other household costs by switching providers.

Claim benefits and rebates

Most benefits are means-tested, so being awarded redundancy pay might mean that you exceed the threshold. If you have existing debts you could pay them off using your redundancy money, however. Depending on when you were made redundant, you may also be eligible to receive a tax rebate.

Generate income

You can make money by selling old or unwanted items around the house, either online or at a car boot sale. It’s surprising how much money this can generate over time, and it provides a financial boost that can help to cover your expenses.

Seek professional assistance

Obtaining professional assistance so you don’t enter a spiral of debt can relieve some of the worry when you’ve been made redundant. A licensed insolvency practitioner will offer valuable advice on staying afloat, and provide guidance on the formal solutions that are available should you need them.

If you’d like more information on coping with redundancy, or already owe money to creditors and need specific advice, Scotland Debt Solutions can help. We specialise in helping Scottish residents in debt, and will ensure you receive detailed and reliable guidance.

We operate from five offices around Scotland, and can offer you a same-day meeting free-of-charge. Call one of the team for more information.

Sharon McDougall
Sharon McDougall
Manager
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