Hyderabad: Layoffs. Job loss. We are hearing these words repeatedly in recent times. Anything may happen in these days of recession likely to hit the world. In such an eventuality, what went on smoothly till now will throw us into chaos and uncertainty. We find it difficult to cope with if not well prepared. What to do when such circumstances force us to quit employment?
Emergency fund
There are some companies which give two to three months salary even if the job is terminated. This will help you to grow financially. In addition to this we should have an emergency fund of at least six months. A certain amount can be withdrawn to meet unexpected expenses. Do not withdraw the entire amount at once. At least 25 percent of salary should be diverted to put together this emergency fund. It can be parked in a fixed deposit.
Stop over spending
If job cuts have started in the company/sector you are working in, review your spending. Stop over using credit cards. Avoid unnecessary expenses. Try to save as much as possible. If you lose income, you may not be able to pay credit card bills on time. This will have a negative impact on your credit history. Especially don't take personal loans, vehicle loan top-up etc. Paying EMI can be difficult.
Relinquish luxuries
Say no to luxuries. Focus only on basic necessities. In order to save money, wasteful expenses should be reduced. There are certainly alternatives to some. These should be used. It is better to avoid expensive items and meals. Let go of some desires. Keep in mind that this will increase the surplus amount even more.
Rs 5 lakh health cover
It is time to be extra careful. Those covered by employer-provided group health insurance should also take their own policy without delay. Don't forget that group insurance protection goes away when you leave a job. If you fall ill unexpectedly during unemployment, you will face difficulties. Sometimes, the entire savings will be exhausted for treatment if not covered. A health insurance of at least Rs 5 lakh is mandatory to cover the entire family.
Withdraw sparingly
Many withdraw entire investments at once when income is lost. This is not good. Emergency fund should be utilized first. Spend without forgetting the fact that there is no income. Withdraw investments from future funds and equities only when you feel it is necessary.
