Five Ways To Prepare For Job Loss While You Are Still Employed

Unless you have been living in a bunker, you know that our economy is not in a good place. In the last three months, at least 2,000 people in nine companies lost their jobs. Financial services companies, Kenya’s largest employer have been laying off staff for the last two or so years, and other companies such as Diageo, and Airtel have announced layoffs.

A recent tweet by David Ndii, one of the world’s top 50 economists sent a chill down my spine. In the next couple of years, you and I may lose our jobs.

They will. By 2022, one out of five people calling themselves middle class will lose their current source of income. Some of these tanga tanga and kieleweke trolls will be struggling to afford two meals a day, let alone buy bundles. https://t.co/wbNbOnCSMC

— David Ndii (@DavidNdii) October 22, 2019

There is very little we can do at an individual level to change the direction of the economy – this is on our policymakers. But beyond panicking and worrying, there are a few simple things we can do to make sure that we limit our financial suffering, should our sources of income dwindle. The time to prepare is now.

Start putting in place an emergency fund

Start setting aside what you have today, then work towards having at least three months’ worth of your monthly expenses in an emergency fund. This way, should you lose your job, you have 90 days to figure things out. If you do not have an emergency fund in place and are wondering where to even start saving for one, the #52WeekChallenge is a great place to start. The Challenge forces you to start setting money aside every week, and within no time, you have hit your goal. Let your goal for the next 52 Weeks be your emergency fund amount. Last week, I challenged my readers to commit to save weekly to their M-Shwari Lock Savings accounts in the lead up to the end of the year. This can be your start to having an emergency fund.

Build good credit

A few years back I took an unplanned break off work to destress and pursue my farming passion. It was a great experience, and even as I went through the ups and downs of being a farmer, I learned a lot but also rested. As is expected of a farmer’s life, my cashflows were not consistent, yet my expenses were – I needed to keep the farm going, and also pay rent, school fees and buy food for my family. My saving grace at that point was the fact that I had good credit. Over the last couple of years, I worked to have a number of credit lines:

My first line of credit is my immediate family because we have established a great money relationship, something I highly recommend.
Second, is our table bank, where I can borrow up to three times my savings.
The third is my two SACCOs where I can borrow against my savings without the need for a guarantor, and three times that with a guarantor.
Finally, I have a bank credit card, which I only use for temporary cash needs and seek to repay at the end of every month.

These credit lines saved me then and continue to do so today. Be that person who has a good credit history, because it comes in handy when you are not getting paid consistently.

Start exploring alternative sources of income

As I have written before, that everyone should have a side hustle. It helps you sharpen the skills you use at work, it can be a way to release work-stress, and most importantly a source of multiple income streams. As readers of this blog know, I am conservative when it comes to investing in businesses that require full-time care and management, while you are employed – they have very high failure rates. We also know that small businesses are hardest hit by the bad economy, which makes this time an unsuitable time to start a business. But how about offering your services to businesses that may need them on a part-time basis? A business that lets go of their full-time accountant still needs its accounts done. One that cuts down on its sales and marketing management team still needs to sell and will pay someone to manage the team on a part-time basis. This is one of the easiest ways to make some money on the side, you can manage your hours, and eventually can transition into being a full-time consultant.

Manage your lifestyle and expenditure

Even if you do not anticipate job losses in your sector or workplace, the economy will get worse, before it gets better. This means pay will either shrink or not increase as you are accustomed to. This is the time to make those lifestyle cuts, to reduce how much you spend on a day-to-day. Start with the big things (housing, vehicle operating expenses etc), and then optimize on the small expenses that add up. To do this effectively, you will need to know how much you are currently spending, and for that, I recommend that you track your expenses for at least a month. Often, because of hedonic adaptation, we do not think we can take a lifestyle downgrade without it affecting our happiness levels – yet we can. We were happy with less, we can be happy with less “enjoyment”, and more in savings.

Do a kick-ass job at work today

Over two decades back when I was in school, my uncle, who is also my father and mentor told me something that has stuck with me since:

There is always room at the top for the very best

Today, while you have a job to do, do a great job of it. Aim for excellence, and let that be what differentiates your work from everyone else’s. This is at the individual level, but also at the company level. This will greatly improve the chances of you being one of the few that keep their jobs as the economy declines. This is not to say that everyone who gets laid off does not do a great job. Great workers get laid off by companies, but often, companies that have great workers rise to the top when the rest are struggling. At a personal level, your great work will differentiate you in the job search, should you be unfortunate enough to be laid off.

Are you worried about the economy? What things have you done to insulate yourself against its effects? How are you saving money at this time? Let’s discuss in the comments section, and on Twitter.

Photo by Favour Omoruyi on Unsplash