Money management tips that may help you survive job loss

After years of rapid expansion, a season of massive layoffs has been observed across several industries, among major tech companies, other high-profile companies and famous startups. Wearing down employee strength by attrition has become a norm these days. The layoff season not only caused millions of job losses in every sector but also altered the landscape of the country's economy and impacted the SMEs and small business community. Getting laid off or losing employment is the most stressful experience. The anxiety, money worries, and financial stress take a toll and impact mental and emotional health. The layoffs season also has taught us some hard financial lessons. Coping with and coming out from the trauma of losing job is not easy. Most people are financially unable to miss a single paycheck, as they are burdened with loans, EMIs, and other financial commitments. Let this pandemic serve as a lesson to always be financially prepared. These are a few vital money management tips to help fortify finances to tackle the crisis with little or no damage.

You must exercise stringent budgeting measures. If you lose track of your finances, you will soon lose sleep over money. If money is keeping you up at night, you are not alone. More than half fifty percent of adults lose sleep at night over money-related issues. Non-planning and lack of organisation are the root causes that harm your finances, which is the primary reason people lose sleep. Budgeting is nothing but the process of making a plan to handle your money wisely. Budgeting is only estimating income and cash outgo and balancing your spending with your monthly income. Budgeting is a prominent aspect of personal finance and goal setting. Having a financial goal or goal setting is a fundamental component of financial management. Setting a goal is as easy as ABC. The story continues after setting goals. Budgeting helps you track how far you have achieved your goals. Also, it will make you monitor and stick to your financial goals.

An emergency corpus is an essential fund that one should keep aside to tackle the unexpected financial curve balls that life throws at one. The emergency fund acts as a cushion or safety net and offers protection in uncalled-for or unplanned situations. One must keep funds equivalent to six months of salary in deposits or debt instruments to take care of household expenses in case of job loss or any unanticipated financial emergency. Building an emergency fund to pay house rent, EMIs, utility bills, school fees, medical expenses, insurance premiums and others is essential. Keep up to two months' salary in the savings account. It yields the slightest interest ranging from 2.5 per cent to 3.5 per cent. It's always safe to park surplus money in fixed deposits, government securities, or debt mutual funds. Building an emergency fund of at least six months' salary will help to tackle potential financial hardships. One must keep an additional six months' salary to take care of EMIs if burdened with a home, car, or personal loan.

Prioritize your expenses and cut down heavily on non-essential spending. There is nothing worse than impulsive buying. Impulsive buying is the tendency to shop without proper planning. Avoid taking purchasing or spending decisions at the spur of the moment. Do not let your emotions and feelings trigger your purchasing habits. Saving habits improve when you prioritize your spending and postpone the least essential expenses at that juncture. Look for ways and means to trim down your costs. Emulate some practical measures to cut down the unnecessary expenses. To start with, identify luxury and unimportant spending and curtail some discretionary purchases. Be frugal with your money and use it towards paying unforeseen expenditures. Try to discern the difference between needs and wants. Money spent on non-productive activities can be avoided to save and clear off the debt.

It is sensible to have a relook at the existing policy and get additional coverage and riders that are limited under a standard medical insurance policy. Enhancing the sum assured of a current policy with the growing age, life events like marriage, childbirth, and earnings increase is vital. Do not view insurance as an investment. One cannot even imagine how difficult life will be without medical insurance. A plethora of health insurance plans are offered by dozens of insurance companies. Choose a decent plan and cover your family adequately. Life Insurance is a must for every breadwinner. Not having a life insurance cover or taking inadequate life cover could hurt the dependent family members. Do not invest in insurance to save tax but to cover your life and medical expenses.

(The author is a SEBI licensed

Research Analyst. The alumnus

of the Indian Institute of Foreign Trade (IIFT), he had held

leadership roles at

National Geographic,

Reliance Radio Television

Luxembourg, STAR TV)