We can’t plan everything in life. An unexpected economic change could result in your employer letting you go. Or your company might change its strategy and suggest that you, as an employee, look for a new job. There are numerous reasons why your life can head in an unexpected direction, but to ensure it isn’t a turn for the worse, you should be well prepared financially. 

Set aside three months’ worth of salary

As a general rule of thumb, you should set aside at least three months’ worth of salary as a backup when you have the means. This will give you enough flexibility to find a new job or transitional work once you have been dismissed, which will in turn cover your ongoing costs. In addition to this backup, you should also set up an account for emergencies where you save money for unexpected things such as car repairs, doctor’s bills or hospital visits. This will ensure you are properly prepared in the event of dismissal, or if you have to resign. 

Avoid living extravagantly

If it’s security you’re after, don’t make the mistake of living too extravagantly. In other words, try not to get used to a luxurious lifestyle you can barely afford. This does not mean counting every penny and denying yourself all treats. However, you should learn to value money and property and to manage them carefully. Live comfortably, but not to the extent that you have to blow your entire salary on your lifestyle every month. This will ensure you are not jumping in at the deep end if you do not manage to find a new job with a new company right away after a dismissal, if you have to quit your current job for personal reasons or if you just want treat yourself to a break for a career change.

Losing your job without the prospect of a new one is often very stressful as it is, and if additional money problems crop up because you can no longer afford your extravagant lifestyle, this will not help matters. 

Appreciate what you have

The easiest way to save money is to appreciate what you already have. All too often we buy things just because we fancy something new, losing sight of what we’ve already got. If we learn to appreciate and look after the things we own, they will last longer, and this usually costs less than buying new things all the time. For instance: 

• Look after your car. Have it serviced on a regular basis. Drive carefully to avoid accidents and to keep your car in good condition. Use public transport for short journeys, and only drive if you are going on long journeys.
• Treat your clothes with care to avoid any unnecessary wear and tear. Many items of clothing can be repurposed or reused. You could, for instance, use old clothes when you are gardening. Keep your wardrobe neat and tidy. This will prevent anything getting lost, and you will see all your clothes at a glance.
• Keep track of all your supplies and actually use them up. It is hard to create big cash reserves if you go on big shopping sprees every day. Be creative and come up with recipes using ingredients you already have at home.
• Check insurance and contracts/agreements once a year, e.g. health insurance, household insurance or your phone contract. Make changes if need be, or switch providers. You will often find you can save a lot of money. Online platforms are a really easy way to compare deals. The article “Save where it’s worthwhile – the four main savings steps in your budget” has additional everyday saving tips for you. 
  

Be careful about what you buy

In addition to doing without purchases, being more careful about what you buy can also help you to reduce expenses and create cash reserves.

• Sleep on every big shopping trip. Wait at least a day and be honest with yourself: do I really need that? You will be amazed how many times the answer to this question is “no”.
• Find out all you can about a given product before you buy it. It is an especially good idea to compare prices and features if you are buying expensive items. Do I need all the features of this new TV? Is it worth buying an older washing machine model, or does it consume more electricity? Could I share a lawnmower with my neighbours? Maybe rent a drill? Or perhaps I could buy the new dining table second-hand? There are even ways to be more careful when it comes to smaller purchases: ask for beauty product samples, borrow sports equipment from a friend to try it out before you buy it, and try to do without things you hardly ever need. 
• Only go to restaurants on special occasions; don’t make it a habit. Cook with what you already have at home.
• Look for cheaper alternatives before you decide on buying something expensive. Take beauty products, for example. You don’t always have to buy the most expensive brand. Inexpensive products from the pharmacy will often be just as good as the branded product. 
• Pay bills on time or by direct debit. Having to spend money on overdue payment fees is a nuisance and unnecessary. 

A prudent lifestyle requires discipline

It takes just a small amount of discipline to get used to a prudent, sensible lifestyle. But don’t let fear be the boss of you. Try to avoid anything you don’t need or anything that does not make you happy. Your efforts will be rewarded with a satisfying sense of security. After all, a person who is used to being careful with their money does not have to make fundamental changes to their way of living if they lose a source of income. Pursue a lifestyle that will at least give you peace of mind about your finances if you lose your job or decide to concentrate on further studies.