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Preparing yourself financially for a job loss


 

 

Even as I write this, India’s job market is going through one of the worst crises ever. Two of the largest sectors – finance and IT which employ the majority of India’s workforce are experiencing a major slowdown. A leading IT company was in the news recently for laying off as many as 1000 employees in the tech capital of Bangalore without any notice.

Losing your job is a big blow, and at times such as these, it could come as a sudden unwelcome surprise. One should be thankful If he or she gets adequate notice before being laid off ! The biggest and drastic change a job loss brings about in the state of your finances so it pays to do some advance planning, especially if you have heard layoff rumors in your industry or organization.

1.       Take a re look at your monthly spends

It is time to eliminate the extra indulgences – extra cable/ magazine and other monthly subscriptions, opt for cheaper internet and mobile phone plans, reduce eat outs and outings

2.       Try and pay off the outstanding loans

If you anticipate a loss of regular income, all the high interest loans should be paid off immediately, as you would not be in a position to bear the EMI burden anymore. If the loan is a recent one or if it has a huge outstanding which cannot be paid off using personal funds, explore the possibility of switching to a cheaper loan provider.

3.       Maintain an emergency fund

Now that you may not have a regular salary inflow it is more important than ever to keep 6 – 8 months of monthly expenses as an emergency fund in your savings a/c.

4.       Do ensure that you have a stand-alone health and life insurance cover

Most people are adequately covered by health insurance and life insurance by their employers as part of their employee benefits. But when the job goes, so do these benefits. So, the last thing you would want in a situation where you are already without a job, is to pay huge hospital bills in the event of a medical emergency or worst still, leave your family in the lurch if you were to leave this world suddenly. Hence take a basic term insurance and a health policy on priority. For the extent of risk it covers, it surely doesn’t cost much.

5.       Try to find supplementary sources of income

While you are on the look out for a job and are in the process of contacting head hunters and going for interviews, it could be sometime before you get a break. Meanwhile it is important to supplement at least a part of your earlier income – look at alternatives – Internet jobs, part time teaching or work for home/freelancing assignments.

 

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