Imagine this tumultuous two months: finding out your wife is pregnant and then being made redundant. That’s a worrying, chaotic and exciting cocktail.
However, it’s one this writer can now smile about, because those three things happened to yours truly in late 2014. We knew that we had a good chunk of money arriving, but would that be enough? I had six months to see out my time at my current job – would I get a job in that time, and would I be able to save up enough for my new arrival?
Unemployment is currently at a decade-low level and is continuing to fall, but statistics such as these do not always tell the full story. Anyone working for Tata Steel in Port Talbot, for example, will be fearful that their roles could be among the 700-plus jobs that could soon disappear. Some will have young families; many will have mortgages.
The moment you hear the news is the time to act. Consolidating debts into one low-interest loan, or using savings to pay them off, will be a good saver. You can afford to go without your luxuries for a spell; your children cannot go without food and shouldn’t go without toys. Therefore, taking stock of how to best save money in numerous ways should be done early, by eliminating unneeded subscriptions and unnecessary payments. Hopefully it will just be temporary.
Knowing your rights
You can work out exactly what you are entitled to financially using this redundancy calculator. You can be paid for any holiday accrued, or take it as holiday in the time leading up to your leaving date. Even if the company itself has gone bust you should hopefully get some redundancy pay; you’ll need to claim Statutory Redundancy Pay, to be arranged by the insolvency practitioner dealing with your employer’s administration.
The earlier you can react to the news and put steps in place, the better your chances of mitigating the damage and keeping a roof over all your heads. If necessary, contact the mortgage lender and explain the situation – some will allow a month’s mortgage holiday while you are getting back on your feet.
If you have mortgage protection insurance in place this could pay some or all of your mortgage payments per month, presuming that redundancy is covered (and if it isn’t, there isn’t much point in having it).
The average cost of sending a child under two to a childminder is £115.45 per week part time. A redundancy package will soon be drained under those pressures, which equate to around £6,000 a year. It’s possible that your employers might honour any childcare vouchers for a period even after you’ve left, but this certainly isn’t obligatory, and in any event staying on the childcare scheme could affect your redundancy payoff.
There are several options; continue to pay as normal; cancel childcare and enlist grandparents to help out; or cancel and look after the children yourself while presumably attempting to look for work. Remember that your child might lose their spot if you cancel now. Consider looking at additional benefits such as claiming Working Tax Credit.
Redundancy can present some tough challenges at any time in life, but for parents it represents an extra pressure. The key tips; prepare early, seek advice and support, talk to your workplace, and adjust your budgets. If you’re lucky enough to find solutions quickly it need not be a devastating burden.