Five ways to redundancy-proof your finances

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

Ian Thorpe had Rio 2016 in his sights
world cup 2014A history of the third-place play-offs
Tommy Ramone performing at The Old Waldorf Nightclub in 1978 in San Francisco, California.
peopleDrummer Tommy was last surviving member of seminal band
Life and Style
Swimsuit, £245, by Agent Provocateur

Diving in at the deep end is no excuse for shirking the style stakes

The Mexico chief finally lets rip as his emotions get the better of him
world cup 2014
Spectators photograph the Tour de France riders as they make their way through the Yorkshire countryside
voicesHoward Jacobson: Line the streets for a cycling race? You might just as well watch a swarm of wasps
Life and Style
lifeHere's one answer to an inquisitive Reddit user's question
Life and Style
Several male celebrities have confessed to being on a diet, including, from left to right, Hugh Grant, Benedict Cumberbatch and Ryan Reynolds
...and the weight loss industry is rubbing its hands in glee
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
Arts and Entertainment
'Eminem's recovery from substance abuse has made him a more potent performer, with physical charisma and energy he never had before'
arts + entsReview: Wembley Stadium ***
Finacial products from our partners
Property search
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Information Security Manager (ISO 27001, Accreditation, ITIL)

    £70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...

    Biztalk - outstanding opportunity

    £75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...

    Trade Desk Specialist (FIX, Linux, Windows, Network Security)

    £60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...

    Service Desk Analyst (Windows, Active Directory, ITIL, Reuter)

    £35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...

    Day In a Page

    A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

    A History of the First World War in 100 Moments

    Peace without magnanimity - the summit in a railway siding that ended the fighting
    Scottish independence: How the Commonwealth Games could swing the vote

    Scottish independence: How the Commonwealth Games could swing the vote

    In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
    Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

    A writer spends a night on the streets

    Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
    Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

    UK's railways are entering a new golden age

    New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
    Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

    Conchita becomes a 'bride' on Paris catwalk

    Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
    Pétanque World Championship in Marseilles hit by

    Pétanque 'world cup' hit by death threats

    This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
    Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

    Why did we stop eating whelks?

    Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
    10 best women's sunglasses

    In the shade: 10 best women's sunglasses

    From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
    Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

    World Cup final: Messi? Mascherano is key for Argentina...

    No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
    Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

    Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

    18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice