Wednesday, April 21, 2010

Secure your life

A safety margin

I talked about getting fired in the previous post, and how you should react if such an event occurs. One thing I mentioned, is important for what I'm about to explain: the difference between workers and 9-5'ers. In Belgium, when 9-5'ers get fired, they get 3 months to look for another job. This is only true, in case the company has no actual valid reason to fire someone other than 'cutting expenses' (restructuring). During those 3 months, you are allowed to take 1 day off each weak (in 2 half days), so you can look for another job during that day off or update your resume, go to job interviews, etc.
But what about workers? They only get 7 days? Is that fair? Does it matter?
I'm here to tell you that those free days are extra's, and whether you get them or not, you should always be prepared for when you don't have them. How? By building a safety margin in your bank account.

The importance of a safety margin

If you only have 7 days to look for another job or if you are fired on the spot, you can get unemployment. But it takes a while to get the paperwork in order (remember I talked about paperwork in the previous post about getting fired?). During that time, you have no income!
And for people who don't earn a lot of money or have almost empty bank account (those who live paycheck to paycheck), this can be a serious problem.
I wouldn't advise living paycheck to paycheck anyway, but that's beyond the scope of this post.
You could be in that situation at any time, so why not be prepared for it?
Build a safety margin that covers 6 months of living expenses. Why 6 months? Because you should be able to find a new job within 6 months. If you try and you want to, 6 months should be sufficient. If you disagree, change this number to whatever you think is appropriate. Every situation is different, but in general, 6 months should be sufficient.

How to save the money

You can do that by saving as much money as possible, until you reach the specific amount. Cut back on everything you don't really need and save to get that money first.
It's very important to have such a safety margin for several reasons:
  1. You can get fired for a lot of reasons these days.
  2. It might be difficult to find a new job right away, so you need a way to keep paying the bills.
  3. There might be problems with the paperwork, so it might take a while to get unemployment compensation.
  4. Other unexpected expenses may occur.
  5. Having such a safetymargin, makes you feel less affraid of getting fired.
Number 1 is obvious. Especially with the economic crisis that has been happening. The crisis is over now, but many companies still use it as an excuse to fire employees. It's business, nothing more. If they fire people, the share holders know that they save money, it might bring their dividend up, which will make them happy.
Number 2 is also obvious. Especially when a lot of people get fired. They all look for a new job, so the competition for jobhunters can be big. That's why many people couldn't find a job right away in the economic crisis. Also know that it's a good idea to take some time to find a job that suits you. If you take the first job you can get, you might end up in the wrong environment and get fired again. A safety margin gives you the time to be picky.
Number 3 happens to a lot of people. I once had to get unemployment too. The woman I had to talk to, could barely understand Flemish (Dutch) and she misunderstood everything I said. It's also important to stay calm when that happens. Even if they don't know what they're doing, you getting mad at them will only make things worse. Eventually I got the money though.
Number 4 requires some extra explanation. When you have a car and you use it to drive to work, it's a vital investment for your 'income through labour'. If it brakes down, you need to be able to fix it or replace it as soon as possible. This requires a safety margin too.
I do not advocate using a seperate safety margin for this though. Chances of you getting fired and breaking down your car, are small. And if you make sure that the total cost of your car is smaller than your safety margin, you should be alright. The most important thing you need to do is to make sure the safety margin is maxed all the time. If you use some of it during unemployment (to pay the bills and survive, nothing else), you need to save money again as soon as you find a job. If you break your car and need to buy a new one, no problem. But refill that safety margin right after the purchase! Stay safe. Safety is good. Safety makes you feel... safe.
Number 5 is also a good one. If you need to pay the bills, live paycheck to paycheck and can't afford to get fired, you're gonna jump for your boss to satisfy him. Because you can't be fired right now or you wouldn't know what to do. The problem with this mentality is, that you don't stand out anymore. You are not innovative, you don't 'dare'. And that is precisely what's good for your career or for keeping your job. If you are predictable, you are boring. If you are boring, your boss might not see anything in you. He can not expect something radical and improving from you. He can not expect brilliant ideas from you, that will make him rich(er). Be unpredictable, dare to do, dare to stand up to your bosses decisions. How? By not caring whether you get fired!
How? By trusting in your safety margin and your ability to find a new job anyway.

Conclusion

A safety margin is important. If you don't have one right now, make sure you do. Save that money. Build that safety margin and cover those 6 months of living expenses! It will make you feel safe and it might be good for your career.