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Wednesday, November 9, 2011

What if you lose your job today?

Losing a job is one of the subjects many people would rather not talk about. It is a taboo topic just like death and we would rather live on as though it will happen only to other people. With the rising inflation, the rise in interest rates and the loss of value of the local currency, many employers have initiated several institutional restructuring processes that have included job cuts. Several others have factored possible job cuts in their medium term strategies.

It is hence a reality that you could just be a victim of the changes in the air and with the stroke of a pen, you could just be rendered jobless. This is a hard reality yet when it strikes, we all wish we were better prepared for it. Since it is a possibility that the axe can fall on any person, it is wise to consider how well prepared we are for such an eventuality. Companies have different strategies in laying off staff. They could either target the lower cadre, the middle level management like what the KCB Group did a couple of months ago, or even consider laying off the senior management in a bid to manage both costs and productivity.

Knowing that we could just be the next in line after the forthcoming board discussions, how well could we then prepare for a job loss? There are several factors that we need to consider in this process. It is necessary to compare our current monthly income with the total monthly expenditure. This will help us appreciate the amount of surplus we have every month. The comparison will also help us acknowledge the most important costs that must be catered for in the event of a job loss.

Experts in financial management advise that every employed staff should ensure they have some savings that would comfortably take them through 3 months expenses in the event they lose their job. This is critical since you will be able to plan for all the important costs and will help your life not to stall. The sad fact is that many of us live on the edge, spending all we earn and have little or nothing to take us across the lake should the boat fuel get finished mid stream.

Most persons who are self-employed would imagine this piece would only apply to those who are employed by others. The reality however is that even self-employed people can suddenly find themselves without a source of livelihood. Consider the events of the post-election violence in 2008 or the fires that have razed businesses in the recent past. We can all be victims of joblessness hence the need to be equally on the ready.

Having an extra source of income is a great idea for risk mitigation. It is never wise to rely on your employment as the only source of your family livelihood. Since there is no written guarantee that you can never lose the job or business, it is always a great idea to diversify your income sources. Have a business here and some consultancy engagements there as you spread your income net wider. Should your main source of income be interrupted, you should find safety on the other running opportunities.

Finally, as much as the current penetration level of insurance in Kenya ranks at below 5%, it is always a wise idea to ensure we insure our businesses and ourselves so that should fire gut down our premises or we are involved in accidents that leave us totally disabled, hence out of work, such systems could come to our rescue. Since we never can tell what the future holds, it is better to be prepared all ways.

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