The days of working for one company your entire life and retiring with a secure pension have largely become a thing of legend. According to the U.S. Bureau of Labor Statistics, in 2014 the median number of years that workers had been with their current employer was just 4.6 years. This means that workers today could change their jobs eight or more times before they retire. In essence, job security has given way to job insecurity.
In fact, the International Labour Organization recently released a study revealing that only one quarter of the world’s workers have stable employment. And according to a 2013 Gallup poll, nearly a third of the US working population fears being laid off.
Even seemingly stable job fields like technology are shedding the concept of job security. Google, LinkedIn, and other technology companies are increasingly taking advantage of contract work. Workers sign up for “tours of duty” in which they are hired for only a year or two to complete a specific project. Experts anticipate that this “tour of duty” job approach will be adopted by other industries as well.
So how do you prepare for a future in which job insecurity may well become the new normal?
Eliminate credit card debt.
Simply put, debt makes you a slave to your job. High interest credit card debt is the most vicious debt of all. Lose your job and credit card debt could be the demon that causes you to go under. If you have major credit card debt make a plan to get it paid off. You’ll sleep better at night.
Save for major purchases
Imagine financing a brand new car only to find out that you’ve been laid off. Car payments are the ticking time bombs waiting to decimate us in the event of a job loss. I love Dave Ramsey’s advice on automobiles. In his opinion you should always pay cash for your vehicle. Create your own “car payment” and have a certain amount of money transferred from your paycheck to a savings account every month. At the end of three or four years you’ll have enough saved to purchase your vehicle outright without the risk of a car loan.
Establish an emergency fund
According to CNN-Money, it takes 94 days on average for an employee to find a new job. In the meantime the bills still have to be paid. Having an emergency fund not only guarantees that you’ll have money to feed and clothe your family, but it also provides you time and flexibility to wait for the right job instead of being forced to take the first job that comes along out of desperation. Most experts suggest that you save enough money to be able to live like you currently live for three to six months. If you don’t yet have such an emergency fund set up, make it your first financial priority.
Invest in yourself
Act as if you could lose your job tomorrow. If you had to find a new job, what would a prospective employer look for? Work to develop these skills and attributes while at your current job. This may involve, for instance, maintaining the latest certifications or learning a new programming language to stay ahead of the game. In addition, work on developing a far flung network that you can utilize if you ever find yourself out of a job. Remember, in life sometimes it’s not what you know but who you know that counts.
Develop your entrepreneur instinct
The most secure job is the one working for yourself. Being an entrepreneur is not for everyone. But if the desire to be your own boss courses through your veins, consider getting your start while you are presently employed. Start a side-hustle or work on obtaining the skills, training, or mentorship you’ll need for developing your business idea. If you are shown the door, you’ll have a leg up on starting the business of your dreams.
BMWK, how do you prepare for the possibility of losing your job?