Protect your wellbeing from unemployment

The latest Australian Unity Wellbeing Index published today explores what we already know in our gut – that unemployment deeply affects our wellbeing.

As the author of the Australian Unity Wellbeing Index, Professor Cummins from Deakin University notes:

“[Unemployment] is devastating to the wellbeing of the people directly affected and also to the wellbeing of their families. While governments recognise the economic impact of unemployment, the shocking impact on personal wellbeing and mental health is not sufficiently recognised.”

What measures are you taking to protect you and your family from the impact of unemployment?

You may not think losing your job is likely and you may have the typical “we’ll be right” attitude but what evidence do you have to back that attitude?

It’s probably easier than you think to set up some financial protection against the economic impact of retrenchment. Having that financial safety net is also an investment in your mental health as it gives you a greater sense of wellbeing. Don’t wait for or rely upon the Government to support you and your family.

Watch the video in my previous article “Don’t stress about losing your job” to learn the three key elements to your retrenchment safety net.

Thwack! Zero income. How long will you last?

The economic down turn and publicised retrenchments may have caused your mind to wonder “how will I cope if I lose my job?” Whether or not you are facing the potential of losing your job I recommend you seriously ask yourself “how long could I last on zero income?”

If life pulls the plug on your income
will you go down the drain?

The economic down turn and publicised retrenchments may have caused your mind to wonder “how will I cope if I lose my job?” Maybe the answer has stressed you.

Whether or not you are facing the potential of losing your job I recommend you seriously ask yourself “how long could I last on zero income?”

Situations that could create zero income

It is much more likely than you think. Your income could drop to zero as a result of:

  • Retrenchment
  • Injury
  • Illness
  • Exasperation (“I can’t take this job/work any more”)

Exasperation is one cause not to be lightly dismissed. What proportion of people do you know who are working within their passion, in a role and environment that fulfils them? Are you? Would you like the freedom to change and pursue your passion?

Tools to help you cope with zero income

The best tool to give you the ability to easily manage either of the above causes is to have already amassed enough assets and/or passive income.

If you are not yet financially free then consider implementing these other tools until you are.

Liquid savings

How much do you cost to run each month?

If you take the amount of your liquid savings (such as cash) and divide it by your monthly expenses how long will it last?

How long before you fall behind in your loan repayments and start negatively impacting on your credit rating?

One valuable tool for all scenarios is to build up several months, sometimes a year or two of liquid savings. Some of the savings will be in cash or cash-like accounts, some may be in highly traded shares or managed funds.

How much you need in liquid savings depends on you and the choices you’d like to be free to make. At the very least I suggest having three months supply or more.

Insurance, especially income protection

In 2007, 62% of bankruptcies in the USA were medically related. “Most medical debtors were well educated, owned homes, and had middle-class occupations. Three quarters had health insurance.” Forty percent of these bankrupts lost income due to the illness or injury.
(Source: “Medical Bankruptcy in the United States, 2007: Results of a National Study”. Himmelstein et al.)

Private health insurance alone will not help you survive a serious illness or injury. The type of insurance that covers your ability to earn an income is called income protection insurance. It pays you a regular monthly amount to replace up to 75% of your income.

If you don’t have income protection then I highly recommend that you act. Plus the premium is tax deductible – so purchasing a policy now could save you tax this year.

One other type of insurance to consider is Total & Permanent Disability (TPD), which pays a lump sum amount. You probably have some in your superannuation but do you have enough? Most people don’t even have enough to repay their mortgage and give them the security of a roof over their head.

If I was seriously ill or injured the last thing I would want is the stress of being kicked out of my home. If you too don’t want that possibility then either get adequately insured or win lotto division one this week.

Your Actions

To ensure you can easily cope with a loss of income:

  • Build liquid savings
  • Purchase income protection insurance
  • Create flexible wealth
  • Become clear on your needs and your cost to run

I can help you with all of the above:

  • Cash flow coaching to build liquid savings
  • Selecting an insurer who will actually pay a claim
  • Building wealth for lifestyle freedom

Call me now on 1300 669 100 to book your first, complimentary appointment.

Matt HernYours in prosperity

Matt Hern CFP
Financial Educator and Adviser

(This article appeared in my free newsletter “On The Money“. You can subscribe for free here.)

Don’t Stress About Losing Your Job

Are you worried about how you will cope if your job is made redundant? Is this occupying your mind for too much of the day, taking some of the joy out of life or even worse, causing you to lose sleep?

If you have the three elements shared in this video in place then you can be confident you will survive the loss of your job.

 If you have gaps in the three elements then you need to act now to be prepared. If so, visit www.Redundancy-Advice.com.au for more detailed resources to plug the gaps.

Please share these insights with all of your friends and colleagues who are stressed about the possibility of losing their job. Help them get more joy in their life right now!

Redundancy First Aid

Worried about how you will cope if you lose your job? Follow the DR ABC of Redundancy First Aid to reduce your immediate stress and be confident you will survive. The advice is also great to keep in mind just in case you are one of the first on the scene when someone close to you is made redundant.

For more resources and redundancy advice visit www.Redundancy-Advice.com.au