How to manage settlement and severance pay? – All Finance Directory
Perhaps one of the most complex moments that a person can face throughout their working life is to be unemployed, the uncertainty of not having a fixed income can cause moments of stress and tension. Find out what you should and should not do with your settlement money and severance payments.
Generally when an employment contract ends (depending on the contracting modality) people have the right to liquidation and to claim their severance. These economic considerations basically become a lifesaver to face the time in which they will be unemployed, so it is important to know how to manage these resources.
It is first important to make a budget with these resources for a period of 6 months, since this is the average time it takes for a person to get back to work. He also recommended not withdrawing all the resources of the financial institutions, since “normally this becomes pocket money and there is a great temptation to spend the money.
In the case of settlements and severance payments over $ 10 million, it is important that people do not let themselves be dazzled by businesses that promise very high returns in a short time, as these generally do not work out very well. It is essential not to invest in an impulsive business since in order to think of a venture it is necessary to have a long-term plan and knowledge of the type of business.
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In case you decide to invest, that it is ideal to do so in productive assets, that is, in investments that generate some level of income such as a taxi or work tools that allow independence. Acquiring a business such as a cafeteria or a store can also work, as long as the person has the experience and knowledge.
Financial expert believes that real estate is not a good option in these cases, since considering that money is not much; it would only reach for a property of less than $ 50 million that would leave a return of less than 0.5% of its value, a volume of relatively low income for such level of investment.
Finally, the two experts agreed that having a settlement does not mean having money available. You should make rational use of these resources to extend them as much time as possible.
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On the other hand, in the vast majority of cases, liquidations do not represent large volumes of money, it is essential to reduce expenses to the maximum, leisure and shopping expenses should be restricted, to give priority to the payment of fixed household expenses such as mortgage loans, leasing, food, health, and education. Both experts assured that, as far as possible, it is essential to continue being punctual with the payment of debts since default interests can affect the financial situation even more, and they recommend not paying debts in advance because the payment only reduces the time and not the volume of fees.
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