How to achieve a level of financial stability if you have quit your job, been retrenched or fired

The loss of a job can have major financial consequences therefore you need to your financial options to make better decisions. Picture: Freepik

The loss of a job can have major financial consequences therefore you need to your financial options to make better decisions. Picture: Freepik

Published May 13, 2024


Losing your job can have dire financial repercussions on your life and livelihood. There are a number of reasons that people may not have jobs including quitting, retrenchment or being fired.

In 2024, different companies as well as state-owned enterprises have made announcements about job cuts.

Earlier this month it was announced that almost 5,000 Post Office workers could be retrenched after a funding application was denied by the Commission for Conciliation, Mediation and Arbitration (CCMA) and a Single Adjudication Committee.

Movie exhibitor Ster Kinekor also announced last month that they will be laying off 236 workers including staff in the chief executive officer's office, marketing, sales, human capital, information technology, business operations, content, finance, head office, regional operations, and cinemas.

In March 2024, telecommunications company Vodacom also announced that they will be cutting about 80 jobs.

The Great Resignation saw workers leaving there jobs for various reasons which range from extended working hours, less opportunities to take leave and toxic workplace environment, according to Old Mutual.

It is not impossible that people may choose to quit their jobs as more South African companies move towards going back to the office.

According to a developers survey done by OfferZen, more than half of developers prefer to work from home while some of them said that they will quit if they have to back to the office.

Considering these factors, there could be a shift in the job situation for South African workers that could see them without a job.

According to Siyasanga Kashe, Executive of Member Solutions at Momentum Corporate, there are three things that a person will feel once they no longer have a job.

The first thing that they will feel is the immediate impact of the loss of a regular income. Without a steady income coming in it will be difficult to meet their obligations like rental or bond repayments, monthly bills, and other living expenses.

They will also feel emotional stress and anxiety which can attributed to the loss of income.

“The uncertainty associated with finding a new job and piling expenses could take a toll on one’s mental health,” Kashe said.

And, finally they feel that that there financial stability has weakened.

Kashe said that losing a job can affect one’s financial stability and deplete any available savings which can lead to them dipping into savings and relying on credit to cover expenses leading to increase debt levels and financial strain.

Your financial options

Upon leaving a job, individual have various financial options to explore.

Workers have the option to leave their funds investment within their existing provident or pension fund. Kashe said: “This may be a good option if it offer favourable investment options or minimal fees,”

They can also transfer their funds in their pension or provident fund into a preservation fund. This is another good option to save till retirement age where the accumulated funds can be used to buy a retirement annuity.

Siphamandla Buthelezi, head of Platforms and Retirement Fund Administration at NMG Benefits said that a preservation fund will allow you to make one withdrawal if you need emergency savings at a later stage, but only if you did not take a portion in cash when you left the company.

Depending on their financial circumstances, members can withdraw funds, however this may come with tax consequences. According to Kashe, this option should be your last resort as it will affect the available funds upon retirement.

Kashe shares five finance tips for a person that has quit, been fired or retrenched from their job

1. Take a look at your current financial status

You need to assess your financial status and consider available savings, debts and any other expenditure. This will give your clarity how long the savings are going to sustain you as well as where you may need to make cuts.

2. Draw a budget

Draw a budget that is aligned to your financial situation, First you need to prioritise your important expenses like rent, utilities and food. and then cut out unnecessary expenses.

3. Seek alternative income

While you are on the hunt for another job, look for other alternate income streams that won’t require you to deep into your savings including freelance work or a part-time job depending on your skills.

4. Review and adjust your financial goals

Reassess all short to medium term financial goals and make adjustments to your savings approach so they align with new financial status and income.

5. Get financial help

Think about speaking to a financial advisor or retirement benefit counsellor to help you plan for this transition. Financial advisors and benefit counsellors can help you identify all of your options and help you make sound financial decisions.

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