Financial Advisement Discussion on Work It Podcast: Strategies for Using a Severance Package
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When corporations dump workers, they sometimes toss them a "golden handshake." Lily Fung, a financial advisor who earned a hefty six-figure package, tells Tiffany Ang and Gerald Tan what she done with the cash after getting the boot from her 20-year company.
In the corporate world, this golden handshake is often given as a hefty financial payout to laid-off staff members, especially high-ranking employees. It's a common practice during restructuring or takeovers, when roles are made obsolete. The golden handshake offers multiple benefits:
- Financial Safety Net: It safeguards those leaving the company, helping them smoothly navigate the transition period.
- Lawsuit Avoidance: By offering a generous settlement, companies minimize potential legal battles.
- Positive Reputation: Such gestures help maintain a positive corporate image, demonstrating that they care for their exiting employees.
The golden handshake typically includes benefits like accrued leave, bonuses, and superannuation payments. It usually comes into play with specific triggers, like changes in company ownership or substantial reorganization.
Financial experts like Lily Fung leverage this golden handshake to boost their career trajectories or financial security. Here are some frequent strategies they employ:
- Career Makeover: Many beneficiaries use the funds for debt management, starting new ventures, or covering living expenses during a career shift or industry transition.
- Smart Investment: Some incorporate the money into long-term financial planning, using it to launch businesses, bolster professional growth, or buy more time for career development.
- Risk Mitigation: By keeping the payout as a safety net, individuals can guard against financial risks associated with new business ventures or career changes.
Individual uses of the golden handshake vary based on personal financial objectives and career goals.
Lily Fung, having received her golden handshake, invested a portion of it into her personal-finance management, allowing her to secure her financial future. Additionally, she used some of the funds to pursue new business opportunities, aiming to leverage her financial security for career growth.
