Published by Paul West
Life Defining Moments happen to all of us. Sometimes they are positive, joyous things that you want to happen: engagement; marriage; the birth of a child; buying your dream home. Other times, they are things that feel less positive and you wonder why they have to happen to you: illness; divorce; unexpected career change; death. However difficult and challenging the trying Life Defining Moments are initially, they can sometimes ultimately lead to change and growth in a positive direction. Though it’s hard, think, “glass half full.”
With announcements of layoffs by Union Pacific, one Life Defining Moment has recently hit close to home with me. I have many family members, friends, professional acquaintances and Carson Wealth clients that are employed by this local organization making major business announcements. I felt the same way in October of 2015, when ConAgra was facing a move of corporate headquarters out of Omaha, resulting in layoffs, relocations and buyout packages for potentially up to 1,000 employees.
So today, let’s look at five things for you to consider when facing the Life Defining Moment of an unexpected job transition, such as a layoff, buyout or relocation.
Budget & Cash Flow Analysis
Short term impacts
When your monthly income declines or ends, you need a firm handle on what your true cash outflow is per month. No guessing! Pull all of your bank and credit card statements to get accurate numbers. We then need to compare that against your cash flow reserves and other assets to understand your cashflow on a monthly basis.
Needs vs. wants: now is the time to sit down and tighten your grip on what really are needs versus wants. You may have to make decisions to forgo the wants in the short-term to allow you to cover the needs until your income is steady again.
Long term considerations
It may be necessary to dive into your emergency fund or take on some short-term project opportunities before deciding on the right career path for the long-term. You need to look at that next job offer as an opportunity that you want to do, instead of getting stuck feeling like you have to take whatever comes along.
Insurance
Short term impacts
Time to assess your Health needs. Taking the risk with your health insurance coverage can be more dangerous than the financial risk of tight cash flow. Make sure you review the health insurance transition steps outlined by your former employer.
Long term considerations
You may think now is the time to give up any life insurance premiums because you need those dollars for living expenses. If you can avoid this, you should. Your family is even more dependent on you now than ever before if some unfortunate event happened.
Stress
This is inevitably going to be a part of your life. Find your happy place and spend some time there every day. It’s OK to not be busy every moment. Use your time to daydream and this will free your mind to think about new possibilities that you never fathomed. Consider tackling goals or projects that you put off for lack of time while you were working, such as training for a marathon, getting a professional certification, or learning a new skill.
Savings/Investment Planning
Short term impacts
You need to calculate how long your severance plan, PTO payout, or other cash flow options will truly last. Try at all costs to avoid dipping into your retirement vehicles. The tax deferral and potential early withdrawal penalties could be double hits to your savings plans.
Long term considerations
While you are keeping your retirement plan in place, you may have to put on hold any education funding or other long-term goals you have in place. You can get those back on track after cash flow stabilizes.
Big life goals (real estate, trips, purchases, etc.)
Short term impacts
Depending on the results of your cashflow analysis, you may need to adjust things you were planning for in the short term, such as taking a vacation or making a big purchase. If faced with a job relocation, you may also need to consider selling a home and whether to rent or buy in the new location. There are budget, investment and tax considerations you will want to consider and a good financial planner can help you evaluate your options.
Long term considerations
Don’t give up on your dreams! This is just a temporary setback. Keep your Bucket List; just adjust the timing on executing, delaying to when it’s more feasible for your life. A scenario such as a buyout may even provide a jumpstart on helping you move in a new direction to better position you to pursue your Bucket List items.
One key to managing a difficult Life Defining Moment is to manage your attitude. Looking back on your life to-date, you can probably identify several times when a big change was crucial in getting you to the next step or phase. I believe everything in life happens for a reason, though we may not be able to see it in the beginning. Attitude is the winning variable in life’s formula for success.
Life Defining Moments happen to all of us—whether by default of by design. If you proactively act to have a plan in place to manage your financial life, you’ll be better equipped to move forward in the face of change. You’ll be more inclined to make a positive “life pivot” than to get stuck in a downward spiral due to unforeseen circumstances. For many, having the right team in place to support their financial life management can provide the confidence that they are able to live they way they choose day-to-day, can pursue their big life goals and are equipped to handle any Life Defining Moment.
We acknowledge the inherent challenges you may be facing and want to help you manage the change. Contact us for a complimentary, personalized listening session.
