Losing your job is a painful experience. It can feel very personal and overwhelming, bringing a host of financial concerns. You may have pressing questions about the future with so much instability going on.
However, redundancy can also be the start of something new. If handled prudently, it can give you space to reassess priorities and even pivot your career or lifestyle in a more fulfilling direction. Below, our Burnley financial planners offer guidance on how to make the most of this transitional period.
Redundancy: Your rights and benefits
Before taking any other steps, take the time to consider your legal entitlements in the event of redundancy. In 2025-26, you are usually entitled to statutory sick pay (SSP) if you earn £123 per week on average (from 6 April 2025).
SSP is calculated based on your age, weekly pay (capped at £118.75 per week) and length of service. You may also be eligible for other payments (e.g. compensation for unpaid notice periods). Some employers offer enhanced redundancy packages; therefore, always check your contract and consult with HR.
Understanding your rights allows you to build a realistic picture of your current finances. It also empowers you to take control, setting a more stable foundation for your next steps.
Protect your budget and financial wellbeing
The next step is to plan how best to use your outstanding income and short-term savings. A financial buffer can be a rare opportunity, but also a risk if not managed prudently.
Start by scrutinising your monthly outgoings. Are there any areas where you can temporarily reduce spending? Examples much include subscriptions, entertainment or discretionary travel.
The aim is not to cut back needlessly. Rather, it is to preserve your redundancy payment for essentials and priorities. Consider making a cash flow plan for the next six to twelve months, including rent or mortgage payments, utilities, debt repayments and groceries. If you have an emergency fund, now may be the time to deploy it strategically.
If your redundancy package is substantial, now may be a good time to consult a financial adviser about how to use it efficiently. For example, you might wish to pay down high-interest debts or set aside funds in a high-interest savings account.
You may be entitled to State benefits such as Universal Credit, depending on your circumstances. Please note, these are means-tested and could be affected by savings or redundancy income. Plan carefully to avoid unintentionally disqualifying yourself.
Reframe redundancy as a career opportunity
Redundancy might feel like a setback, but it may also be a catalyst for reflection and redirection. Perhaps your previous job was unfulfilling, or your work-life balance was lacking. So, this could be the moment to explore a new path.
For instance, maybe this is the time to finally explore self-employment or retraining. Maybe you could develop skills leading to a more rewarding or resilient career – positioning yourself for a better opportunity in your current field.
Some individuals use this time to consider part-time work, volunteering or consulting. These options can provide income while allowing greater flexibility to assess long-term plans.
Whatever you choose, the key is to move forward deliberately, not out of panic. This is your opportunity to ask: “What do I want from my working life?” and “What legacy do I want to build?” Taking advice and exploring your options calmly can bring clarity and confidence.
Planning ahead: turn transition into transformation
Make sure you stress test your long-term financial foundations. A change in employment can affect your pension contributions, insurance policies and tax position.
For instance, if you were previously part of a workplace pension scheme, check what happens to your contributions post-redundancy. It may now be appropriate to consolidate old pensions or explore a more tailored arrangement, such as a SIPP (Self-Invested Personal Pension).
If you had life insurance or income protection through your employer, these might have ended along with your employment. If so, is replacement cover needed – especially if others rely on your income?
It is also essential to update your tax plan. Up to £30,000 of redundancy pay is usually tax-free, but any payments above this threshold may be taxed. You may also find that your overall income in the tax year has changed significantly. This could offer planning opportunities – e.g. making pension contributions to reduce your taxable income or reclaiming overpaid tax.
Speaking with a regulated financial planner can help you make the most of these changes. Rather than seeing redundancy as a financial shock, you can reframe it as a strategic inflexion point – one that helps build stronger resilience and peace of mind for the future.
Final thoughts
Redundancy is rarely welcome, but it can be meaningful. With the right guidance, it can open up possibilities that were previously hidden or neglected.
If you want to ensure you’re taking the right steps to safeguard your financial future, please get in touch. We’d love to discuss your goals with you!
Please note:
Your capital is at risk. Investments can go down as well as up. Past performance is not indicative of future results. Tax treatment depends on individual circumstances and may change. This content is for information only and not investment advice. Any decision to invest is the reader’s own. Diversification is key to managing risk. Market volatility affects investment values. Inflation erodes savings. Liquidity risks may prevent quick access to funds.
