Things You Can Do Today To Protect Your Finances Tomorrow
Finding out that you’re being laid off, that your company is collapsing, that somebody younger, more experienced, or just better connected to your boss is taking your job, or simply having your position dissolve can be devastating. Many of us plan our lives and our finances based on our current financial situation. We put aside X amount of money each month because by year Y we’ll have Z in savings, but that’s assuming our job and income will be secure until year Y. And nothing should be assumed. If you do lose your job or find yourself financially unstable, you could obsess over the past, wondering what one thing you could have done differently. The truth is no one thing could have made this moment easier; several could have. Here are things you can do today to protect your finances and career tomorrow.
Make personal connections
There may come a day when your company is making cuts, everybody is equally valuable and experienced, and the only deciding factor left is who the powers at be enjoy working with. So yes, join the team kickball league, go on the company retreats and attend the birthday party in the break room. If you’re good at your job but people can say, “I’ve never really spoken to her” you could be the one to go. A personal connection goes a long way in work.
Have a mentor
A mentor always secretly has job opportunities for you in the back of her head. Every time you learn a new skill or do something impressive, she’s privately placing you in other job positions—should the occasion arise. Having a mentor isn’t only amazing for advancing your career, but it also provides you someone who can vouch for your skills, is well-connected and can probably help you skip the whole months-of-unemployment period.
Become a mentor
Those who don’t do, teach, and you could be a teacher if your job falls through. If you mentor someone less experienced in your field, then if you find yourself without work for a while, your mentee can refer you to other, younger professionals who are willing to pay for a little guidance. Your mentee may very well surpass you, start her own business, and be able to bring you onboard. Be proud if she does this—that means you did a good job!
Constantly grow your skill set
If you are constantly taking classes, teaching yourself new programs that are applicable to your industry, learning new languages and expanding your skillset, it will be very hard for your company to let you go. There will come a point when they’ve given you so many responsibilities that letting you go would just be a headache for them because they’d need to hire five new people to replace you.
Set up an automatic savings account
Stop crossing your fingers and hoping that you put aside $400 a month. Set up a savings account, and arrange it so that X amount of money is automatically deposited from your checking to your savings each month. This simple act can help you know when, “Okay. I’ve used up my entertainment and shopping budget for the month” and will stop you from accidentally dipping into your would-be savings.
Get an expense tracker
There are several useful expense trackers out there like Mint and Expensify. Within these, you can set budgets and identify exactly how much you’d like to spend on things like groceries, dining out, gas and cocktails each month, while still being able to put aside savings. These apps will send you notifications when you’re approaching your budget limits, so you can plan the rest of your month accordingly.
Embrace change at work with ease
The people who make change the most difficult at work are the first ones to go. In other words, if your work is implementing new software that you all need to use, or introducing a new manager who has a very different style than the last one, you should treat the change like a total breeze. Be enthusiastic and positive about it. Resisting it, being stubborn to adapt or kicking up a fuss just makes you a target for a lay-off.
Build a six-month cushion
Forget the three-month cushion; build a six-month cushion. Make this your first financial goal, before any other. What this means is having enough money in your bank account to pay for rent, groceries, utilities and the essentials for six months of unemployment. Some people say you only need three months, but the reality is that finding a new job can take three months in this economy. The stress of your depleting savings could affect how you handle job interviews and could make you settle for a job you don’t love. Give yourself the luxury of a six-month cushion, so you can take your time and find a new job you will want to keep.
Meet with a financial advisor
If you haven’t already, it’s time! Many will meet with you for free. They can talk to you about things you hadn’t even thought about, like saving for a home—but what kind of home? And in what city? And saving for retirement—but when exactly will you retire? And what quality of retirement do you want to have? The discrepancy between the money you thought you needed and the money you actually need to have a nice retirement could be surprising.
Max out our 401K
Many companies automatically enroll you in their 401K program at three percent, but you can likely be enrolled at six or seven percent. Ask to make that change, so you can slowly—without even noticing it—save a little more for your retirement over the years. You won’t notice that extra three or four percent missing from your paycheck, but you’ll notice it in a good way when retirement comes around.
Always have a side hustle
I know what you’re thinking; I work a 40-hour week how am I going to find the time for a side hustle? But your side hustle could be miniscule. It could be tutoring one student for one hour a week who is studying your field of work; it could be slowly developing your presence on Etsy or Ebay. If your main job falls through, you will at least already be partially established in another line of work so all you have to do is ramp it up, rather than learn a whole new type of work and hunt down that first client.
Buy something that appreciates
A lot of individuals don’t realize that they could qualify for a home loan. What’s more is that a lot of people don’t realize their mortgage payments could be around the same price they’re already paying for rent, but at least they’re paying to own that property in the end. Nobody ever feels fully ready to buy a home (even if it’s just a small condo), so don’t wait to feel ready. Start considering your budget and neighborhoods you like now.
Stop buying things that depreciate
Stop spending money on things that depreciate like clothes and jet skis. Those are just money down the drain. Take stock of what you typically spend money on and ask yourself what you could actually sell if you needed to. The answer may surprise you.
Slowly increase your credit limit
You can slowly increase your credit limit (try an extra $500 every couple of years) to increase your credit score. Increasing it gradually can prevent an inquiry on your credit that would actually decrease it.
Train people without being asked
The managers and supervisors at work have a lot on their plate. If you see a new employee struggling to understand something, and the supervisor is busy, just take a few minutes to help that young employee. Taking on a training role is another step that could make you indispensable to the company.