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Here's how to manage finances after a job layoff

Here's how to manage finances after a job layoff

While we cannot avoid the situation, we can definitely protect us and our family financially by taking right decisions.

Since your regular flow of money has stopped the next challenge is to have enough money in hand to meet your daily expenses. Since your regular flow of money has stopped the next challenge is to have enough money in hand to meet your daily expenses.

Following biggies like Meta, Twitter, Amazon, Microsoft, Indian corporates have also been issuing pink slips to thousands of employees. For example, Swiggy announced that it is firing 380 employees as part of its latest layoff process. Similarly, Exotel, a customer engagement platform based out of Bengaluru, has laid off 15 per cent of its employees in the latest layoff rounds. 


At some stage, you will get back to earning, but you need to provide a bridge till such time. While we cannot avoid the situation, we can definitely protect us and our family financially by taking right decisions. The first right move is to take account of your expenses. 


“The immediate action to take is to evaluate expenses into 3 buckets: a) must spend (essentials + commitment) b) nice to spend (to keep the morale up, eg, one outing with friends every month) c) can postpone. Provide for the first 2 buckets for next 3-6 months and keep the money handy,” says Lovaii Navlakhi, Board Member, Association of Registered Investment Advisors (ARIA).


Shweta Jain, a Bengaluru based financial planner, agrees, “First cut all expenses that are not mandatory. Cut credit cards if your spending is out of control. Spend only what's absolutely necessary. Figure out what income you have for the next couple of months. What assets and how much can be easily liquidated. How the loans are running, what EMIs you have and if any can be put on holiday in the next few months.”

Since your regular flow of money has stopped the next challenge is to have enough money in hand to meet your daily expenses. For this ensure you break your short-term funds leaving long term funds untouched. In addition, consider the one with least costs such as no exit load and lower capital gains tax before deciding what to liquidate first.


“Ensuring you use the emergency funds kept for this purpose and not your long-term assets is most important. But don't liquidate long term investments. Use FDs and savings accounts first, then use any other debt products that you have be it liquid or debt mutual funds. Last would be equity, EPF and gold. Stop all SIPs immediately as this should not be locked in for long time and you may have penalties if you withdraw,” says Jain.


Experts also say that splurging is something you should stay away from considering people tend to spend more when feeling depressed. “People end up splurging as they feel depressed and have a lot of time and take up loans or use credit cards and don't pay full amounts. People also liquidate any and all investments thinking they will need it all immediately, that's not the case. Liquidate your long-term assets like equity only if you have no other option left. Before taking an EMI holiday evaluate the impact on the loan and then decide.” says Jain


Navlakhi says that often people make wrong decisions thinking that this will last forever making decisions which are irreversible like exiting all equities because one can't think of taking risks. Most importantly, keep yourself busy during this time by monetizing any hobby that you have be it baking or content whilst applying actively.

 
Also read: Davos 2023: WEF says reskilling of workforce can add $8.3 trillion to the global economy

Also read: Swiggy fires 380 employees over email, CEO apologizes and says company overhired

Published on: Jan 20, 2023, 3:33 PM IST
Posted by: Tarab Zaidi, Jan 20, 2023, 2:00 PM IST
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