In the past few weeks, two friends of mine who work in unrelated companies received a redundancy notice driven by recent merger and acquisition activity on the island.

One package I am told is quite generous, rewarding her for 22 years of service, while my other friend stated hers feels like a slap in the face for her eight years of service with the company, as if the legal team focused solely on minimising the legally required payout.

Ironically, both friends saw the writing on the wall from early signs like hiring freezes, frequent closed-door meetings, and unusual over-friendliness from HR and managers in the weeks before they received their redundancy notices.

As one of my friends put it, they were probably on best behaviour, hoping to avoid any negative mentions in an exit interview. These classic red flags often precede M&A-driven redundancies, signalling restructuring ahead.

Knowing both my friends well, they have a lot of experience and education, and I am sure they will bounce back fine and will utilise the redundancy financial package to support them during their search for another job.

However, what happens when the redundancy pay runs out and you are still searching for the right job?

Let's face it, this happens sometimes, and for those affected there is a specific moment of dread that comes when the final withdrawal from the redundancy package is made, yet you have nothing in the hopper for job prospects.

For months, that lump sum acted as a psychological shield, a tangible buffer between you and the reality of unemployment. But when it is gone, the true weight of job loss settles in, and as my friend put it, a slight depression sets in, feeling unwanted and not good enough.

The fact is, losing a job is destabilising. Losing a job after the financial cushion has evaporated is terrifying. The redundancy package was meant to buy time: time to search for the right role, time to retrain, time to breathe.

Once it is used up, the luxury of patience disappears. Bills continue to arrive. The mortgage does not pause. The grocery bill does not shrink, and the annual school fees still need to be paid in the coming months.

This is the moment when the absence of a dedicated emergency fund becomes painfully apparent. A redundancy package is often treated as a windfall, but in reality, it is a temporary financial bridge.

But without additional savings set aside specifically for prolonged unemployment, that bridge has a finite end. When it collapses, panic sets in.

The pressure to accept any job, regardless of fit or fair compensation, becomes overwhelming. Savings accounts meant for other goals are drained. Credit cards begin to carry balances that grow month after month.

If you find yourself in this situation, priority must shift from finding the perfect role to stabilising the present, and common sense must prevail.

Seek interim work, even slightly outside your industry, to slow the financial bleed. More importantly, let this experience serve as a lesson for the future about the importance of having an emergency fund.

I cannot stress enough the importance of having an emergency fund. An emergency fund is not merely a savings account; it is a buffer between you and chaos. It is almost like a self-funded insurance policy for when you know what hits the fan!

It is important to remember that an emergency fund is designed as a financial buffer while you get your feet back on the ground, and job loss falls within the criteria of usage.

Having an emergency fund will change the calculus of unemployment entirely. It transforms a crisis into a manageable inconvenience.

With cash reserves set aside, a job seeker retains the power of choice. They can afford to take the time necessary to update their skills, network effectively, and wait for a position that matches their worth rather than taking a role born of desperation.

This financial runway reduces stress, which is crucial for mental health and the ability to perform well in interviews.

The sooner you start setting aside money for an emergency fund the better. A six-to-nine-month emergency fund is the gold standard of financial security.

It is the difference between weathering a job loss with confidence and spiralling into debt. While the target may seem daunting, building it is achievable through consistency and intentionality.

Start with the number. Calculate your essential monthly expenses: housing, utilities, groceries, transportation, insurance, and minimum debt payments.

Multiply that by six or nine. This is your target. Rather than being intimidated by the figure, focus on the process rather than the finish line.

As I mentioned in a recent article, automate everything. Treat your emergency fund contribution as a non-negotiable expense by setting up an automatic transfer from your bank account to a dedicated high-yield savings account on payday.

Even a small amount, sent consistently, builds momentum. Increase the amount whenever possible after a pay raise or by simply redirecting discretionary spending.

Keep the funds separate. Maintain this money in a distinct account, not intertwined with your everyday spending.

Out of sight, out of mind reduces the temptation to dip in for non-emergencies but also make sure to choose a liquid account where funds remain accessible without penalties or market risk.

Now I must warn, be prepared to adjust expectations temporarily. Building a substantial fund may require short-term sacrifices, perhaps fewer takeout meals, pausing non-essential subscriptions, or delaying a vacation.

Remind yourself that this is not permanent deprivation; it is intentional preparation for the unexpected and the unplanned.

An emergency fund of this size is not built overnight, but it is built by ordinary people with consistent habits. I am sure your future self, especially one facing an unexpected redundancy, will thank you.

• Carla Seely is the chief operating officer at Freisenbruch Insurance Services Limited and has 26 years of experience in the international financial services, wealth management, and insurance industries. During her career, she has obtained several investment licences through the Canadian Securities Institute. She holds the ACSI qualification through the Chartered Institute for Securities and Investments (UK), the qualified associate financial planner (QAFP) designation through FP Canada, and the associate in insurance (AINS) designation through The Institutes. She also completed a Master’s Degree in Business and Management through University of Essex.

• For further inquiries or suggested topics, e-mail justaskcarla@outlook.com.