Financial Autonomy

Redundancy – not something most of us like to contemplate. Yet it is a reality for many of us in our working life. So rather than redundancy being seen as something negative, let's flip it around - your redundancy could be the best thing that has ever happened to you. Financial autonomy is about building financial strategies to give you choices in life. And very often these choices present themselves at moments of transition. In this case, your transition is leaving the comfort of a work place you've been at for many years, maybe even decades, and moving onto the next chapter in your life. Today's podcast will explore how you can make this transition a successful one. I'm Paul Benson and you're listening to the Financial Autonomy audio blog. Let's dive in! It's not you, it's them. Over the years I've dealt with many people who have been made redundant and so I know it can be a huge confidence sapper. But I want to tell you, if you are currently facing redundancy that you being made redundant is almost never about you – your performance, skills, or work ethic. You've been made redundant because the industry has changed, or the company you work for has changed. In some cases there is simply a natural pyramid structure with lots of workers needed at the customer facing coal face, but far less managers and senior people as you move up the pyramid, such that workers need to be shed over time to accommodate the new blood coming through. Being made redundant can be distressing – how will you keep a roof over your head and food on the table? Where will you find a new job? And there is also the loss of regular contact with your work colleagues. But there are positives too. Give some thought to the opportunities your redundancy presents. In a career sense, perhaps you can try something different. Maybe you could start your own business. Perhaps the payout you receive puts you in a stronger financial position so you can have more flexibility in your working life. Does it continue to be essential that you work 5 days per week? Financial autonomy is about building financial strategies to give you choices in life. And very often these choices present themselves at moments of transition. In this case, your transition is leaving the comfort of a work place you've been at for many years, maybe even decades, and moving onto the next chapter in your life. Be completely assured – you can make this transition a successful one, and we're here to help you do just that. Before jumping down the first path that presents itself, let's take a moment to consider the range of options you have available. I've come up with 8 – let me know if you can think of more: 1. Apply for a new job in the same field as you are currently working in. 2. Apply for a new job in a completely different industry, but which still draws on some of the skills you have built up in your old job. 3. Retrain to do something completely different. 4. Start a business to become self-employed. 5. Buy an existing business. 6. Freelance. 7. Work part time and pursue other passions 8. Retire Applying for a new job in the same industry that you were in probably doesn't require a lot of planning. If you worked in a bank for instance, there is every chance that you will find work at another bank. For many, this is not an option due to industries winding down, or they've simply had enough of working in that sector. I've worked with a client who was on the production line at Holden, and is now working in the food manufacturing industry. He's in a completely different industry, but it still utilises many of his skill in production line automation. Someone else I know worked at Kodak. When made redundant from that dying industry, he found work at the company that prints our bank notes – different industry but still using his skills. Take a step back – what other industries use the skills you have? This redundancy could be great opportunity to move from an industry in decline into one on a growth path. Retraining can present another great opportunity. Often we finish our formal education and then fall into a job – just go with the flow a bit. Before we know it we've got a mortgage and perhaps a family, and the thought of changing stream now is just unfathomable. But a redundancy might provide the perfect opportunity to make that change given you will receive some sort of payout to reflect years of service. With some good planning around managing your cash flows, this redundancy might give you the opportunity to finally pursue the thing you were born to do. What about starting a business? In episode 1 we looked at getting yourself into a financial position to start your own business. We made this our first episode because this is an ambition for a lot of the people we work with. Making it a reality is tough though because most businesses make little money in the first year. But your redundancy package may be just the thing you need to make that transition a reality. If you haven'

So you've decided you're ready to take the big plunge and start your own business. Congratulations. Having transitioned from being an employee to running my own business, I can tell you, you will be in for some challenges, but also many rewards, not least of which is flexibility in how you manage your time. I know of self employed people who like early morning, quiet, thinking time, and so choose to work for 2-3 hours from 6am, then take a break, do some exercise, have something to eat, and sit back down to continue working late morning. Others work better at night, hitting full stride at 10pm and working through until the early hours. Of course many businesses require you to be on deck during normal business hours to respond to customers, but even here you have flexibility, especially when you employ staff, to decide when you will be "at the coal face". So you've made your decision, but how to be financially ready to start your own business? You need a roof over your head and food on the table. Perhaps you have a family to support. Most often the thing holding people back from taking the plunge into self employment is the financial worry. But that is where good financial planning comes into play. I don't know about you, but sometimes I have pieces of work that need doing, and I just really don't want to do them, primarily because I don't know where to start and so it's daunting. So I keep pushing them aside thinking maybe I'll feel in the mood to tackle that one tomorrow. Eventually I bite the bullet and my usual strategy is to make it the first thing I do in the day. So often, once I get cracking, I find it actually wasn't nearly as big a deal as I had thought, and the piece of work I had been dreading is knocked over in half an hour. Now whilst a financial plan to get you ready to start your own business will certainly take more than half an hour, I think it is common for people to put off planning for the move because the thought of doing the planning is just too daunting. They just don't know where to start. Well let's solve that for you! None of us are getting any younger, so the sooner you transition into the thing you are passionate about, the more of your life can be devoted to that dream instead of clocking in doing something that is not totally fulfilling. There are two elements required for you to be financially ready to start your own business – a Survival Strategy, and a Capital Strategy. By Survival Strategy I mean how will you (and your family if relevant) survive financially whilst you get this business off the ground? How will you maintain a roof over your head and food on the table? The Capital Strategy concerns your new business – how will you fund the start up costs, marketing, perhaps fit-out costs and the like? Step 1 – the Survival Strategy The starting point in developing your survival strategy is for you to be clear on how much you spend. That means doing a household budget. Now I know that for most people doing a household budget is about as appealing as taking an ice bath in the middle of winter, but if you want to transition successfully from being an employee to running your own business, it just needs to be done. I would set-up a spread-sheet (I have created one you could use, which can be found in our Resources page here), but if you're not comfortable with that, hand written on a piece of paper will work too. Set up something like this: Start with your housing costs – mortgage repayments or rent. These are likely to be your largest expense. Of course if you're lucky enough to own your house without a mortgage, well done you, you can skip past this bit. Record expenses as either weekly, fortnightly, or monthly, and then tally that to a yearly figure (the sample spread-sheet will do this automatically for you.) So now you know how much it currently costs per year to live. Save that one, now create a second version with what is necessary to survive. Let's be realistic – if you want to pursue your dream of starting your own business, some sacrifices will be required. Perhaps you will need to forgo an annual holiday. Maybe spending on clothing and eating out will need to be cut back for a while. Short term pain, long term gain! An option you may be able to explore if you have a mortgage is reducing your loan repayments down to the minimum required, as most of us, very wisely, pay more than the minimum. You could also explore having the loan structured as interest only. In both cases this is not intended to be a long term thing, but it may be helpful for a year or two as you get established in your new enterprise. Okay, so you've crunched your numbers and the minimum amount of money you need to survive is let's say $42,000 per year. I would divide that by 12 to get a more meaningful number of $3,500 per month. Now of course bills are lumpy so some months it will be a little more and some a little less, so a bit of a buffer of cash in the bank is needed. But you now have a target t

A brief outline of what we'll be doing in the Financial Autonomy podcast.