Laid Off? Here Is How To Financially Navigate The Tough Times
Cutting down your expenses, looking for alternative sources of income and digging into your debt investments will help you survive the difficult times post a layoff
The news of layoffs has been making headlines for a while now. While tech giants like Tesla and Google have laid off people, companies in India have been affected too.
Layoffs have been the most pronounced in the information technology (IT) industry. "Last year was a brutal year for the IT industry. About 2.7 lakh job cuts were globally and it impacted many in India as well, with close to 60,000 layoffs. However, we see that in 2024, layoffs are fewer than what they were last year," says Neeti Sharma, CEO, TeamLease Digital, a tech professional services platform. However, layoffs continue and other industries have been affected as well.
A job, especially a private one, is not secure anymore and that is a reality that one needs to accept. What makes things worse is that today, finding a job is more difficult and sometimes one may require several months to land a suitable job. So, one needs to financially plan for such an emergency.
See Where You Stand
The first thing to do is to have an idea of your financial status. "Start by evaluating your current financial status. Take stock of your bank balances, savings, investments, outstanding debts, and monthly expenses. This assessment will provide clarity on where you stand and help guide your financial decisions moving forward," says Sharda Deepakraj Lala, Founder, Siddhantha Wealth Managers.
Upon notification of your layoff, your employer will provide details of any severance package. "Take the time to thoroughly review and understand the terms. Remember, these packages are often negotiable, so if you believe you're entitled to more, consider discussing it with your employer," says Lala.
Cut Down Your Expenses
Like air expands to fill space, often we tend to spend more money as we earn more. There are a lot of areas one can cut down on expenses and in case of a layoff, this is crucial.
"Have a well thought out spending plan to cover fixed expenses and see how discretionary expenses can be controlled. Have a conversation to explain the plan in detail with all family members and build a consensus on the same so that they are also aware of what is happening," says Vishal Dhawan, CEO, founder, Plan Ahead Wealth Advisors. Thus expenses like eating out are among the first expenses you would like to trim. At the same time, restrict your credit card spends.
Don't Miss EMIs And Premiums
Paying your insurance premiums and your EMIs should be top priority. If you have an emergency fund, now is the time to spend that. In case you do not have one, things will be more difficult.
It is absolutely crucial that you pay your credit card debt on time "Do not roll over credit card debt as it is very expensive. Try to spend such that you get the benefit of the maximum period without paying any interest," says Dhawan.
Dig Into Existing Investments
If you do not have an emergency fund, or run out of it, there would be no option but to dig into your savings. "Look at liquid funds, fixed deposits, debt funds as the first choices for exit. Avoid taking more loans during this period unless it is from friendly sources," says Dhawan.
At this time, it is also prudent to look at part-time gigs which can give you some income. The more you can stretch your savings, the more time you will have in hand to look for your next job, without worrying too much about your finances.
