Enda Goodwin Posted September 11, 2020 at 12:28 AM Enda Goodwin Field Agent 157 Share In financial areas of career transition, the experts often say, “hope for the best transition, work for the best possible outcome, and prepare for the worst case financial scenario, just in case.” Got severance? With a well-planned search, you could land a job before your severance runs out. You could come out financially ahead! But even in a good job market, you should do your transitional financial planning based on the possibility of a long search. Financial plan You might be lucky and find a great new job in a few weeks, but you should, of course, make your financial plans based on the worst case, not the best one. So think about how long the worst case search might take, and use that in your financial planning. It depends in part on the difficulty of your search. While many factors influence difficulty, compensation is certainly important. If you’re looking for a high-comp, C-level job, think the higher end of the time range, just to be safe. No matter what your expected compensation, you should know exactly how many months you can afford to live at your current level of expenditures – without having to dip into a 401K, liquidate investments at an inopportune time, or make other disadvantageous financial moves. Don’t guess. Do the math. If your calculations show that it would be prudent to reduce your expenditures, there are a number of suggestions in this section. Do you have a budget? In normal times, most of us don’t do careful personal budgeting. But searching for a job while unemployed does not reflect normal times. It calls for more careful spending. This might be a good time to put a budget on paper — or to start using personal budgeting software, if you’re not already doing that. What can you cut back? What expenditures can you defer? Don’t be too severe. Job hunting can be a stressful activity, and you’ll need some recreation. But it’s certainly not a time for extravagant spending. If you have severance benefits, don’t wait until they run out to reduce your expenditures. Cutting back a bit now will extend the time you can be financially comfortable. If you have children, consider involving them in expenditure reduction. This can be a family project. And remember: if you’re lucky enough to have unconditional severance and you manage your finances well, it’s possible to actually make a profit on your transition. If you want a basic form to help get you started on your budget, check out the Family Monthly Budget Schedule, or go to http://www.kiplinger.com/tools/budget/. You can also purchase personal finance programs such as Quicken or Microsoft Money with built-in budget-making tools. College-age dependents Talk to the financial aid office immediately to see if they are willing to make adjustments in your dependents’ tuition and costs. Your income has changed, so your eligibility for financial aid also may have changed. Some colleges will not make adjustments in financial aid while you are receiving severance. Some will want to wait and see how long you are unemployed. Some will base any consideration on what your total annual income turns out to be. But it’s usually worth a phone call to open the conversation. If you have a tuition payment coming up soon, it‘s also worth asking whether it can be partially or wholly deferred. And if so, ask about the terms. Managing debts If you have debt, it is better to contact creditors sooner rather than later. Creditors are sometimes willing to make accommodations for people who have lost their jobs. Your mortgage holder, for example, may be willing to accept interest only payments until you are working again. And you may be able to renegotiate the payment terms on any debt. Talking to creditors early is a good idea. When they see you‘re operating in good faith and want to make arrangements to avoid any possibility of missing payments, they are often willing to discuss alternatives. If you are in a position where your debts could become a serious problem while you’re unemployed, you should seek professional debt counseling immediately. But beware of unsolicited offers of assistance in debt management – there are numerous scams in this area, some aimed particularly at the unemployed. Generating income For many job hunters, there are opportunities on the revenue side of things as well as the cost management side. Many professionals, managers and executives are able to operate consulting practices while in job search. The obvious advantage is some added income. But it also can be an alternate way to meet the right people and build professional relationships. And, if your search runs long, it provides a new top line for the résumé, so that you are not presenting yourself as unemployed. Some job hunters who use this strategy find that they are successful enough in consulting that they can discontinue job hunting and pursue a consulting career. Beyond consulting, are there others ways you might bring in some income and still have sufficient time and energy for job hunting? Do you have a spouse or partner who might bring in more income while you’re in transition? What other options do you have? Even small amounts of extra income can extend your comfort zone while unemployed, so this area is well worth considering. The sooner you address these issues with your personal life, the sooner you will be emotionally ready to focus on your job search. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now