Financial uncertainty arising due to pay cuts or job loss could be a scary thing at any given point in your career but having to deal with such uncertainty in these trying times when the opportunity to find another good job immediately is rather bleak, is even worse.
Just as the virus and the lockdown forced all of us to focus inwards and stay indoors to protect ourselves and it has forced many companies to trim their operations and cut costs to safeguard the future and financial health of their business, which will inevitably result in loss of jobs for many.
Though you cannot fight your unexplained termination but here is a list of proactive measures you can take to prepare yourself for the worst-
Make a no-frills budget
Your existing budget consists of various expenses by you which would include your needs such as food, utilities, etc. and your wants such as shopping, hobbies, travel, etc. When things were smooth, you may not have micro-managed your finances.
Now, you must prepare a no-frill budget that focuses on your basic survival needs and design an educated plan to help you manage money more efficiently.
Pad up your emergency corpus
Having an emergency corpus is important to cover the unexpected outflow of money from your regular spending. You may already have an emergency fund set aside for medical emergencies, home repairs, or in the current situation the fear of being laid off. Cutting down unnecessary expenses and putting all the extra money in your emergency funds will be a wise move.
You can park your emergency corpus in a liquid fund as they help you provide liquidity along with the potential to provide reasonable returns on your investment.
Health insurance policy
As employees, most of you rely on your employer for your health insurance needs for your family and yourself. Having sufficient health insurance cover for you and your family is important to avoid hardships.
If you have young kids, then a family health insurance plan is good for you and your family. If you have aging parents with health issues buying individual plans for them could be better.
Pay off your debt
When you have a steady job, a sizeable portion of your income goes into repaying loans every month. However, in the absence of a regular income, these repayments can be tough. Home loan EMIs cannot be paid off or cut back immediately but making a plan and paying off high-interest debt such as personal loans, credit cards, etc. proactively while you still have a job should be your top priority.
Review your investments
Reviewing your investments does not tantamount to liquidating your investments. On the contrary, it means keeping your crucial investments intact so that your financial portfolio does not suffer a permanent setback because of a temporary situation.
If you have been regularly investing in mutual funds through SIPs for different goals such as retirement, buying a home, travel, etc. then you can consider pausing some of the SIPs for a few months if you still have a long time to go before you need those funds.
Plan a side hustle for second income
In today’s time, it is important to have more than one source of income. If you have been pursuing a hobby or interest and can help you create an additional income now would be a good time to cash on.
Even though it is not direct financial advice, but networking can play an important role in our financial wellbeing. Practicing social distancing in person is important today, but, thanks to social media and forums you can always stay connected with people. Having access to the right people and resources can help you find gainful employment faster if needed.
The final word
Losing your job can be incredibly stressful and nobody chooses to be in such a situation. However, the pandemic has created significant havoc and is showing no signs of slowing down. Being emotionally and financially prepared in such stressful times can help sail through in these tough times.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.