Despite recent improvements in the employment situation, this remains an issue of concern for many Americans.
According to a recent COUNTRY Financial Security Index survey, 68 percent of consumers think their job security is likely to be the same or worse in 2014. COUNTRY points out that this contrasts with the view of Wall Street economists, who think job security is likely to increase as the unemployment rate drops to 6.3 percent by the end of 2014.
Are You Worried About Your Job?
If the financial crisis and recession taught consumers anything, it’s that your job isn’t as secure as you would like. Layoffs can happen to almost anyone. And, even if you’re not laid off, your hours could be cut significantly, or you could face a furlough. These are situations that result in lower earnings from your job. With many Americans concerned about job security, reduced hours, and unpaid leaves, it is little wonder that there’s a divergence between Wall Street and Main Street.
If you’re worried about your job, it makes sense to do what you can to prepare yourself and your finances for the possibilities of a layoff or hours reduction.
How to Improve Your Income Security
Even if you think your job is secure, now is the time to improve your income security. It’s important to separate the idea of your job from your income. If your day job is your only source of income — especially if you’re not building up an emergency fund — you could be in trouble down the road.
If you lost your job, or if your hours were cut, what would you do? Do you have another source of income to fall back on?
Alternate sources of income can include:
- Emergency fund
- Investment account (including income investments like dividend stocks and P2P lending income)
- Rental property income
- Side business income (including freelancing and web site revenue)
- Royalties from a creative endeavor
- Part-time job held by your partner
Relying entirely on your job can put your finances at risk in a big way. What you need, instead, is income diversity. When you have other sources of income, it’s not as big of a deal when your day job runs into problems. You can use your investment account, or other income sources, to help you through the tough times.
If you aren’t sure about your job security, now is a good time to start looking for other sources of income. Consider setting aside more of your paycheck for emergency savings, or starting an income portfolio. Think about getting a side gig, or seeing if it’s feasible for your partner to start working part-time or start a home business.
Many of us have learned that what the “experts” see happening on Wall Street doesn’t necessarily translate into solid gains for those of us on Main Street. You need to look at your individual finances and take appropriate action to keep your income safe.
Have you considered income security before? What are you doing to ensure it?
About the Author
This article was written by Miranda Marquit and originally appeared on moneyning.com. Moneyning.com is a personal finance blog where insights are shared on how to carefully save money, invest for the future, and live frugally and happily – because it’s the little things that matter in achieving financial freedom.