Nine tips to survive the financial stress of retrenchment

By Hein Davids, Manager: Non-Life Products, Sanlam Personal Portfolios.

In tough economic times, retrenchment has become a widespread business occurrence. Sound knowledge and decisive, informed action have been the saving grace of those who have pulled through. Sanlam Personal Portfolio (SPP) offers a range of investment solutions for those wanting to preserve their retirement savings following retrenchment or wanting to invest discretionary savings for their future security.

Tip #1: Don’t take it personal

You dedicated much of your time and energy to your job, and the reality is that retrenchment is not your fault. Your company probably came to a point where it needed to make a financial decision to ensure its survival.

Tip #2: Overhaul your CV and get it out there

Looking for a new job takes time. Ask the HR specialist handling your retrenchment about the possibility of redeployment. In big organisations, there may often be opportunities in other divisions. Be open to the possibility of having to take a pay-cut in a new role.

Tip #3: Reinvent yourself and your career, but …

… within reason. If you are thinking of starting a new business venture, be realistic about the projects and business ideas that might tempt you. Now is not the time to take uncalculated risks.

Tip #4: Cut your household budget

Now is the time to go through your monthly household budget with a fine comb. It would be best if you were strict and clinical about the unavoidable expenses (e.g., your bond repayment or kids’ school fees) and those that are luxuries and can be suspended until you have a regular income again.

Tip #5: Appoint a financial planner

Now is truly the best time to get a financial planner. There are some big, important financial decisions to be made, and a qualified financial planner can help you make them with confidence.

Tip #6: Step away from your pension fund

Cashing in 100% of your pension fund can be the most financially damaging decision you can make. If you cash in the entire pot, you are robbing yourself at age 60 – it’s that simple.

Tip #7: Transfer your pension fund into a preservation fund

As the name suggests, preservation funds protect your pension money. You can withdraw it later, but the longer it stays there, the better. Together with your financial planner, you can decide how the money should be invested.

Tip #8: Check if you have retrenchment cover

Check the cover on your credit card or retail store accounts. Perhaps a built-in retrenchment cover you didn’t know about is included in your service fees. If you have a policy that covers retrenchment specifically, good for you. It could help ease your financial burden.

Tip #9: Speak up

Don’t be embarrassed to ask for better interest rates, reduced instalments on your accounts, or even payment holidays, but whatever you do, don’t ignore your debt obligations. If you are struggling to keep up your debt payments, a conversation with the credit manager at your bank or a debt counsellor will go a long way to prevent judgements and blacklisting.

For more information and advice on this topic, speak to an accredited Financial Advisor or Broker, alternatively email [email protected], with any queries.

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