Unemployment in the UK is now at its highest level in 14 years, official figures have shown. If you're concerned about how you would cope if you lost your job, here are five things you can do to help prepare for the worst...
According to the latest figures from the Office for National Statistics, the number of people out of work in the UK climbed to 2.47m in the three months to July, its highest level since 1995.
This means the jobless rate is now at 7.9 per cent, while the amount of claims for unemployment benefit has shot up to 1.61m, the highest on record for 12 years.
It's no wonder therefore, that many of us are increasingly concerned about our job security.
If you are unfortunate enough to lose your income, you may find you're unable to pay your bills or support your current lifestyle.
Here are five ways you can help protect yourself from financial disaster should the worst happen.
1. Freshen up your finances
First and foremost, give yourself a financial health check.
Look carefully at the current state of your affairs and see if there is anything you can do to cut costs and free up some spare cash.
Address your essential spending and ensure you are not paying over the odds for your mortgage, insurance policies and energy bills.
Be aware that many companies save their most competitive prices for new customers. Therefore it's crucial to take the time to shop around and compare a range of deals.
If you owe money on expensive credit cards and personal loans, find out if you can reduce your interest payments by shifting your debt onto a cheaper balance transfer credit card.
These deals are currently hard to come by for anyone without a flawless credit history, but a balance transfer card is likely to be impossible for you to get should you try after being made redundant.
Therefore, if you think you'll be eligible for one, it's better to apply sooner rather than later
2. Build up an emergency cash cushion
In troubled times like these, it's vital you have an emergency cash fund to fall back on should something go wrong.
It's a good idea to amass a savings pot equivalent to a few months salary so if you do lose your job you will have some breathing space while you decide your next move.
Even if you can only afford to put a small amount into savings each month, it is far better to save little and often than not at all.
Remember, it's important you are able to access your emergency fund as and when you need to. Saving in an easy access account will allow you to withdraw your money at very late notice and do not charge a penalty fee for the privilege.
3. Insure your pay packet
You may want to consider taking out an insurance policy that will protect you in the event you lost your job.
Payment protection insurance (PPI) is designed to pay the interest on a loan or credit card should you become sick, have an accident or lose your job.
PPI can also be referred to as accident, sickness and unemployment (ASU) insurance.
However, ASU insurance can be a different type of policy, with different benefits.
Unlike PPI, ASU insurance may also cover a proportion of your income in addition to your debt repayments if you are unable to work.
Be aware that both policies often come with a long list of exclusions. Ensure you read the small print carefully and understand in what circumstances you are and are not covered.
If you do decide to take out this type of insurance policy, it's crucial you shop around for an affordable deal.
It's never a good idea to simply accept an offer direct from your lender without first checking to see if there is a better deal available elsewhere.
4. Know what your rights
It's important you are aware of what you would be entitled to from your employer and the state if you were made redundant.
Any payout you may receive will depend on how long you have been employed in your job, your age and how much you earn.
Make sure you find out where you would seek redress if you thought you had been treated unfairly in the redundancy process.
In this situation, don’t be afraid to ask for help. The Advisory, Conciliation and Arbitration Service (Acas) and Citizens Advice both offer free, confidential and impartial advice.
5. Keep positive
For many people redundancy is often an incredibly stressful and emotional experience.
However, it's vital you try to remain positive and plan your next move.
Make sure your CV is up to date and sign up to any training courses that may help you.
This means that when you do get an interview for a new job, you will be prepared and able to give the best performance you can.
Victoria Bischoff is a personal finance writer at BeatThatQuote.comReuse content