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Dealing with unemployment


Published 23 December 2019

If you’ve recently become unemployed, it pays to get on top of your finances.

Whatever the circumstances, losing your job is an emotional experience. Unemployment can be a period of unsettlement and uncertainty, but taking a practical approach and learning what to do when unemployed can help you manage your worries.

One of the first things you should do is sort out your finances and take charge of your super. This will ensure you can meet your expenses throughout unemployment and come out the other side in a stable financial position.

While sole traders and business owners are not required to pay themselves superannuation, Barton pledged to continue making contributions to her retirement, equivalent to or greater than those to which an employee would be entitled when she became her own boss back in 2008.

Manage your finances 

Staying on top of your finances will ensure you can meet your day-to-day expenses throughout unemployment.

Firstly, make sure you understand how much money you have. Whether it’s a redundancy package or a rainy day fund, look at the amount of money you have to work with during unemployment and be honest with yourself about how much you can afford to spend. Assume that you won’t receive an income for the next few weeks or months and work out a budget based on your available savings.

Create a budget that includes rent or mortgage payments, bills, groceries, fuel and other ongoing costs. Prioritise the payment of bills over purchasing extra items and luxuries, and see if you can adjust your spending to suit your budget. For example, you could opt for home brand grocery items or cut out certain costs like a daily coffee from a cafe.

To help you work out your expenses, you can use our free Budget Planner.

Look for part-time work 

While you’re on the hunt for a permanent job, you may want to consider taking up part-time or casual work.

A part-time job can lift your confidence and boost your income. That extra income will help you meet day-to-day expenses and relieve some of the financial stress associated with unemployment. Part-time work can also generate new skills and allow you to make valuable connections that might even lead to something more permanent.

Part-time work is said to be more widely available now than ever. In a recent address, Reserve Bank of Australia (RBA) Governor Philip Lowe said, “In the past, when part-time work was not as readily available, many people – mostly women – faced the choice of taking full-time paid employment or no paid employment at all. Many chose to, or had to stay outside the labour force because working was not a realistic option.

“Given the trend towards part-time and more flexible jobs, people have more options than they had before.”

Redundancy 

Redundancy can happen when a business becomes insolvent or bankrupt, or if an employee’s job no longer needs to be done by anyone (for example, through a business restructure or when new technology is introduced).

If you’ve been made redundant, you may be entitled to redundancy pay. The amount you receive as redundancy pay depends on how long you’ve worked for your employer, not including any unpaid leave.

Just note that some small businesses don’t need to offer redundancy pay. There are also several circumstances in which employees aren’t entitled to it, such as when working casually or when they’ve been employed for less than 12 months. The Fair Work Ombudsman has more information on redundancy and pay entitlements.

Some insurance policies may also cover redundancy. Find out more here.

Consolidate your super 

Consolidating your super is a smart financial move, regardless of if you’re employed or looking for work. Holding super across multiple funds means paying several sets of fees, which can be easily avoided by rolling all of your super into a single account. This is especially important when you’re not earning an income because those fees can add up to a significant (and preventable) amount each month. This can eventually eat away at your super, meaning fewer funds available come retirement.

Learn more about superannuation and find out how to make it work for you with our guides to superannuation.

Take your super fund with you 

When you do start a new job, take your super fund with you. At the point where your employer asks you to nominate a super fund, make sure it’s the same one you’ve been nominating in previous jobs or the fund into which you consolidated your super.

This is a great way to avoid unnecessary fees or paying for insurance you may not need. By sticking with a single account, you can reduce your superannuation expenses and ensure your super balance isn’t chewed up by extra fees.

Spouse contributions 

To keep your super contributions ticking along, your spouse can make contributions to your fund on your behalf. Married, de facto and same sex couples can make spouse super contributions. This type of contribution not only allows you to continue building your nest egg throughout unemployment, but your spouse may be entitled to a tax offset of up to $540.

Early release of super 

Depending on when you were born, you can typically access your super when you’ve reached your preservation age (between 55 and 60) and permanently retired or when you turn 65 regardless of your employment status. Your super may also be released early if you’re going through severe financial hardship, have a terminal illness, if you need it on compassionate grounds (such as not being able to pay your mortgage), or if you become permanently incapacitated. On the grounds of financial hardship, you can access between $1000 and $10,000 only once in any 12-month period. The limited circumstances that you can access your super early are subject to strict rules. 

While releasing money from your super might seem like a good idea now, it shouldn’t be your first choice after losing your job. The money sitting in your superannuation account is intended to see you through retirement, and there are other ways of dealing with unemployment that won’t impact your future financial position.

Stay on top of your super with ANZ

ANZ Smart Choice Super is a low-cost product designed to suit changing lives and needs. It also offers the option to add income protection cover, as well as flexible investment options.

Find out more about ANZ Smart Choice Super in our answers to frequently asked questions, or get in touch with ANZ for a consultation on your current superannuation fund.

 

 

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OnePath Custodians Pty Limited (OnePath Custodians) ABN 12 008 508 496, AFSL 238346, RSE L0000673 is the trustee of the Retirement Portfolio Service (ABN 61 808 189 263, RSE R1000986) (Fund) and issuer of the interests in “ANZ Smart Choice Super”, a suite of products consisting of ANZ Smart Choice Super, ANZ Smart Choice Super for employers and their employees and ANZ Smart Choice Super for QBE Management Services Pty Ltd and their employees.

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