Have you ever considered how you would survive without a job? This question is both uncomfortable yet very powerful. It’s uncomfortable if your salary is your main source of income. It’s powerful because it’s a psychological trigger to get your house in order. Actually setting your own job loss or retirement date is a powerful trigger to accelerate your journey to financial independence.
We shall all lose our jobs eventually. It’s just a matter of time. Our companies may go bankrupt. Our skills may become obsolete. We can be fired or retired. Whatever the case all jobs will disappear at some point.
So how can we prepare ourselves for this inevitability? Here are a few ideas:
- Save some cash. Save some cash to shield you from unexpected job losses. Aim to have savings which can sustain you for at least six to twelve months. If you’re lucky you’ll be able to find alternative employment within a year or so.
- Develop a broad set of skills. For example if you’re an Accountant learn how to rear cattle. If you lose your accounting job you can start a dairy project. Having a broad skill set insures you against sudden job losses.
- Secure your house. Owning a home for your family is the best insurance policy you can have. Knowing that you’ll always have a roof over your head gives you a lot of peace. Even when you lose your job you can go back home and sleep. So while in employment strive to own a modest house.
- Get out of debt. Too much debt will enslave you to your job. The fear of money lenders will keep you working harder and harder. With little debt you can easily weather the storm of job loss.
- Build side hustles. A side hustle or business typically needs 3 to 5 years to become sustainable. If you lose your main job you simply focus on your side hustle. So build your side hustle while still in employment. Don’t wait to be fired then you start figuring out how to grow coffee.
- Build social capital. Your close family and friends will help you in case of calamity. They will house you, encourage you, and even provide for you. Make sure you invest in the right relationships.
- Get insurance. Some form of life assurance, health insurance or job loss insurance may help.
- Invest in assets. For example you can liquidate a piece of land to give you some cash to go through hard times. But you can only sell things you already own.
- Build an independent identity separate from your job. You are not your job description. Corporate employees are especially prone to taking on the identity of their employers. However this identity crumbles when they lose their job. This can lead to stress and lack of fulfillment. For example The Money Engineer brand is separate from my employer. Whether I still have a job or not I will continue to build The Money Engineer brand. So I will never be jobless.
- Strive for self employment. Wherever possible strive for self employment. You have more control over your career when you’re self employed. If you’re lawyer partner with other friends and start your own law firm. Of course self employment is much more difficult and risky than employment but if you’re well prepared it’s more rewarding.
Job loss is inevitable and as such we need to prepare for it. So what are you doing today to prepare yourself for unemployment?