In order to simplify your personal finances you must be prepared for the unexpected. With the current global economic state that we are currently living in, are you prepared if you lost your job tomorrow? You may not feel like your job is at risk but you never know. So have you considered how you would handle an unexpected or even expected job loss? What would you do?
Most people would answer get another job. Unless you already have have something lined up it could take several weeks or even months to find another job. Are you prepared to have no income for several months?
What you really must have in place to lessen the financial impact and relieve some stress is a job loss disaster plan. This plan would map out what you would do if you suddenly lost your job . Its better to spend a few hours now mapping out your plan instead of several days or months wondering where your next pay check will come from. Here are some things you want to consider when designing you job loss disaster plan:
Do I have an emergency fund in place to cover short term job loss? You should have an emergency fund built up to cover your living expenses for several months in case of possible job loss.
Is my emergency fund adequately funded in case of job loss? If you have an emergency fund in place is there enough in the fund now to cover your current living expenses for several months.
What would I do about medical insurance? If you employer supplements your current medical insurance, its important for you to know what your options are if your job is eliminated.
Where would I begin my job search? Know where you would start looking for new job if your current one is eliminated.
Do I have a current resume? Make sure your resume is current and ready to be distributed to potential employers.
What current expenses could I eliminate if necessary? Review your current expenses and identify expenses that you could eliminate. These may be current luxuries that you can afford while employed but you may not be able to continue if faced with job loss.
Identify the minimum income I can live on each month? Review your monthly budget and determine what is the minimum about of income you will need monthly.
What other sources of income do I currently have? Do you have investment income or other ways to generate income outside of your job to help.
How much debt do I have outstanding? Knowing what you owe is important especially if your job is eliminated. Now is a good time to work to eliminate any unnecessary debt just in case. If you having a difficult time paying off this debt with a job just think how difficult it will be to eliminate this debt without a job.
So take action by answering these questions and begin putting your job loss disaster plan in place. By having a disaster plan in place you will not only simplify your finances but also reduce some stress when and if a job loss occurs. Remember its always better to be safe than sorry and to be prepared then unprepared.
Let me know what you would do if you loss your job today?