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Lately, it seems like every day the headlines talk about thousands of people facing retrenchment. What would you do if your boss called you aside to let you know that due to the recent restructuring, your position no longer exists and they are letting you go? Are you financially prepared for this type of news?

The days of “job security” are a thing of the past. In an era of downsizing, restructuring and retrenchment, no one is assured of long-term employment any longer, so it is important to have a plan of action in case you are suddenly laid off. Many employees see some warning signs that their jobs may be at risk but it is so easy to brush this aside when you don’t feel any immediate threat or are not under undue pressure.

The future is largely uncertain and the threat of sudden unemployment is all too real for many people. Whether you are 25 or 55, chances are that at some point in your life you could find yourself out of work. Even if you feel secure in your job right now, it is best to be financially prepared rather than to be caught off guard. Consider the following tips:

Review your expenses

When you are in a “secure” job you tend not to dwell on what you spend each month and where you can cut back. Do you know how much you spend on your weekly grocery bill or eating out? Are your utility bills exorbitant? Can you reduce your mobile phone bill? Are you paying subscriptions or membership fees for services you don’t even use?

While the job outlook is uncertain, it is important to try to live below your means and avoid unnecessary spending. Try to determine the minimum sum that you may need to cover basic expenses, such as rent or mortgage payments, utility bills, food, transportation and health insurance. Develop a budget that reins in most non essential spending until the job outlook improves. If you had already been on a budget, it would be much easier to cope financially if you have to look for another job.

Start to save

If savings have never been a priority for you, now is the time to start to set some money aside. It is recommended that you have the equivalent of three to six months’ income to tide you over if you lose your job, but given the current state of the job market, it is wise to save more especially if you have a family to support. This for many might seem like an impossible amount to accumulate but by tracking your expenses you can start to work towards this goal rather than to do nothing at all.

Even if you do not have the entire amount saved, whatever you manage to save could go towards your rent, mortgage, food and debt. It will also help to protect your retirement savings. Place such emergency savings in a high yield money market account where it is easily accessible.

Be cautious about debt

Are you in debt? A poor credit profile can negatively impact upon a future job search and limit your financial options. If you sense that redundancy might be in the offing, be cautious about taking on any new debt. Credit card and other high interest debt should become your first priority and should be reduced or paid down immediately. If you were to lose your job while paying thousands of naira in interest and principle, it would be challenging to get yourself out of this difficulty.

Review your health insurance policy

One of the big pitfalls of retrenchment is the loss of health insurance. Review the health benefits at your current job and check what options will be available to you in the event of a lay off. How much would cost you to maintain your insurance cover privately? Remember that you would have to pay both the employer and employee shares of the premiums in order to keep the same coverage.

Improve your skills

You should continually be looking for opportunities for self-development to improve your knowledge, skills and certifications. Do not depend totally on your current employer to put this in place for you; you owe it to yourself to develop yourself. Constantly update your CV to reflect your new skills so that you will always be able to present the most updated version.

It is also worth exploring other income earning opportunities that you can pursue without their having any impact on your present job. This must not become a distraction as if you do not stay totally focused on the job at hand you might actually be accelerating your retrenchment!

Network, network, network

Take networking seriously as some of the contacts you make may well end up being your potential employers in the future. Reactivate your network if you have been a bit lax about keeping in touch with acquaintances and associates; it is much easier to call someone just to say hello than it is to call them to ask for a job, especially when you haven’t spoken to them in several months.

Don’t get unduly stressed by the possibility of being made redundant as this is largely out of your control. As you continue to work with a positive attitude, build a sound business reputation and give your job your very best commitment, you are less likely to face this prospect. But no matter how good your prospects may be, it does no harm to be prepared and to get your finances in order.