How to prepare for the end of furlough

Eighteen months and 66 billion pounds later, furlough is coming to an end in the UK. On the 30th September 2021, the government scheme will officially be over and understandably, people are panicking.

For workers in severely affected industries, their employers might not be able to retain their services. Others will have to work fewer hours or be redeployed to positions that pay less.

So, how should staff prepare for the end of furlough?

If you are unsure of what your employment situation will be either due to furlough, the pandemic or other economic factors, here are some things you need to be doing now.

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1.???Top-up your emergency fund

The first thing you need to do is ensure you have some money waiting for you, no matter how it swings. The best way to do that is with an emergency fund.

An emergency fund is a savings account that consists of between 6 to 12 months’ salary only to be used in extreme circumstances. An emergency fund comes in when a person loses their job, is faced with an illness insurance can’t cover, or some other unpredictable financial constraint.

It is not to be used to buy a home, pay school fees or any other regular or determinable expense. An emergency fund is only for things you can’t plan.

Luckily, the pandemic has forced many people to save more than usual, as there are fewer opportunities to spend.

According to the European Central Bank, the average household savings in the euro area doubled between Q1 of 2020 and Q2 of 2021.

Gross household savings in the UK more than doubled from roughly ￡32 billion to ￡75 billion during that same period.

If you have been saving more but haven’t yet reached the minimum threshold of 6 months’ salary, now’s the time to stretch those pennies.

2.??Develop a lean budget

Photo by?Sarah Chai?from?Pexels

One of the things that’ll help you save more is living on a lean budget. The purpose of a tight budget is to help you boost your emergency fund, and to also prepare you for how to live on savings.

?The National Institute of Economic and Social Research (Niesr) expects that the end of furlough will cause unemployment to increase by 150,000. Given that 1.9 million people accessed furlough in June, it is promising to know that most of these won’t be out of a job at the end of September.

If you happen to be among those found seeking a job, you need to prepare your budget and mindset accordingly. Ironically, the pandemic has also helped prepare us for this. We were forced to live without certain luxuries, so the reopening of shops and stores shouldn’t change your budget.

For example, consumers spent on average 30% less on hospitality compared to pre-pandemic levels. Depending on your restaurant budget, this could be hundreds of pounds saved per year if you keep this up.

But remember, these measures are just until you get back on your feet.

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3.??Maximise your pension contributions

When you’re in the midst of a crisis, it can be hard to think about the future. Therefore, it is not surprising to find out that 16% of employees cut back on their pension contributions during the pandemic, while only 6% increased it.

The reasoning behind it is understandable, but misleading. As difficult as it is now, the pandemic and recession should only last a few more months, but retirement is for the rest of your life. The odds are you won’t be contributing to your pension if you’re out of a job or working part-time, so you need to take advantage of your employment benefits.

Maximise your pension contributions by meeting your employer match or get as close to the annual allowance as you can. This is also critical as many people have been forced to retire earlier than planned.

To live comfortably in retirement, Which? Money recommends you have at least ￡265,420 for a couple. If you haven’t saved that much, then you either need to save more now or don’t retire for a few years.

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4.??Acquire new skills

Photo by?Zen Chung?from?Pexels

Another critical thing you need to do is develop the skills in high-demand. If you work in the hospitality or tourism industry, chances are the market is going to be down for a while.

However, there are other industries that have grown considerably, such as food delivery, ecommerce, healthcare, transportation and logistics.

Now is a good time to acquire new skills to boost your chances of employment. There are many schools and universities offering virtual courses and diplomas at reduced rates due to Covid-19, making this a perfect time to go back to school.

Besides formal education, you can explore other ways to enter the thriving industries.

So, while you are planning (budgeting and saving) like you won’t have any income, you are also working to ensure you will. That is what you call a win-win strategy, and yes, we are confident you will win with your finances when furlough comes to an end.

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5.??Grow your network

The one thing that could help you get a job quicker, with or without the right qualifications, is knowing the right people. Employees in an organization will usually know of any job hires before the information is made public, so it pays to be on their radar.

Knowing someone in that organisation could help you get hired quicker, which is why it is helpful to boost your network. You can do this via LinkedIn, attending seminars or collaborating with staff in different organisations.

As dark and depressing as the market may be, there are always people in need of new workers. The larger your network, the higher the possibility of getting a new and maybe even better job.

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