X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
How To Manage Your Personal Finances When Laid-Off - Outside View by PersonalFN
  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

How To Manage Your Personal Finances When Laid-Off
May 23, 2017

The sweltering heat of May is getting discomfiting by the day; but more so for the IT workforce in India.

IT firms such as Infosys, Wipro, Tech Mahindra, HCL Technologies, US-based Cognisant, DXC Technology, and France-based Capgemini are laying-off thousands of engineers this year, and the number is twice the workforce retrenched last year. Many are serving their notice period already.

Why is this happening?

IT companies have begun to work on new technologies, such as cloud computing, and embracing automation requiring fewer IT workforce. So, employees who're smart thinkers and well-versed with the new technology are retained, and others are asked to leave.

Besides, US President Donald Trump's protectionist policies are also weighing on the Indian IT firms. In addition, the companies are focusing on profitability by saving cost.

So, how does one sustain financially during a layoff...

Well, needless to say layoffs have a damaging impact on your financial wellbeing. Hence, during such times it's primarily important to be in full control of your personal finances.

Here are 9 things you can do:

  1. Draw a cash-flow plan:

    Subscribe to the good habit of budgeting, and draw a cash-flow plan by estimating income, expenses and monthly liabilities. To ensure that it's a collective effort, involve your family so that potentially, puts you in much better control of your finances and please continue to follow this practice even after you acquire a new job. Remember, some of the best life lessons are taught amid adversities.

  2. Keep control on your expenses:

    It is critical to reduce your expenses. You can't afford to be extravagant, because that can damage your financial health. Explain the situation to your family without losing your cool and encourage them to save money as well.

    Rationalising expenses can provide you some relief during distressed times. Besides, avail of discounts, e-coupons, better bargains; but do so only on things that are a necessity such as groceries, medication, etc. Hold off on the temptation to venture out shopping, dining, entertainment/ movies, and so on. To commute, consider using public transport instead of driving a car, even if you own one. While handling utility bills, keep in mind the objective to save - be it electricity, phone bills, etc. -even though some bills may seem inevitable to an extent.

  3. Utilize your contingency fund sensibly:

    If you've been wise enough to keep some money aside as an emergency or a contingency fund (in a saving bank account and/or liquid fund), utilise it; but do so extremely thoughtfully.

    If you've been reckless and never maintained a contingency fund, but own gold, make use - it is a lender of last resort, a saviour during times of uncertainties.

  4. Judiciously count on your existing assets:

    Likewise, your other existing assets can come to your rescue in times of distress. So, make a list of them and analyse which of them could be sold for meeting your regular expenses, at least until you find a new job.

    For example, a car, which is a depreciating asset, can be put up for resale to meet regular expenses. Similarly, the unwanted items we accumulate over the years, stacked in storage, can be discarded even if it fetches you a lower price. Also, if you own antiques that you wish to part with, consult an expert. Such an approach will enable you to accumulate funds and manage during dire times.

  5. Find a source of income:

    Until you find a full-time job of your choice, calibre - consider finding a part-time job where your skills can be put to use. Today, even freelancing, is an effective medium of self-employment if pursued correctly and seriously.

    In times where even these two options may seem difficult to come by, consider how your hobbies can be monetised; while your primary job would be to find a job. Adding a source of income will help you sail well during a crisis, and thus networking wisely during such times is the key. Reach out to your friends/ ex-colleagues/previous employers and explore the options they may have for you.

  6. Keep your retirement savings untouched:

    Invading or touching your retirement savings can cost you dearly. So best is not to encash your PF and dig into the other provisions meant to address your goal of living a comfortable retirement. Instead what you could do is, push your retirement back by a few years to cover up this loss during the earning phase of your economic life cycle.

  7. Don't allow your insurance policies to lapse:

    Stopping insurance premiums payments- be it life, health - is not your best long-term interest. But if you hold insurance-cum-investment plans, which usually earn a dismal rate of return and offer a low cost-to-benefit, you may consider giving up, i.e. surrendering these.

    Term insurance is by far the best to indemnify risk to life. Ensure that you're optimally covered and continue to pay the premiums. Likewise, with rising medical & healthcare cost, not paying the premium can prove to be a blunder. The heavy bills can drain out your finances at one go and prove perilous for your financial health.

  8. Renegotiate term with creditors:

    If you owe money to an institution, bank, or person, think about how you can renegotiate the terms of repayment. While this may seem freakish, this could perhaps be the best time to renegotiate the 'terms of credit' if you explain the situation in all sincerity. For all you know, they may be ready to extend your repayment tenure, or lower the interest rate, thereby helping reduce your debt burden.

    Draw detailed chart (including interest rate, tenure, default penalty, and so on) if you have too many debts. You will benefit from prioritising debt repayments and the best strategy is to repay loans that carry a higher interest rate first.

  9. Reach out to an expert:

    During rough times, our ability to think prudently is often disjointed. Besides, we may not be adroit enough owing our background, a different field. It would therefore be worthy to reach out to a Certified Financial Guardian - a mark of trust and respect, who can counsel and handhold you to streamline your personal finances prudently.

PersonalFN is of the view that crisis can storm anyone's life. Hence, it becomes vital to plan for the worst while hoping for the best. Holistic financial planning succours you to do that: build a contingency fund and accomplish your long-term financial goals. Besides, a carefully drawn financial plan helps in instilling the necessary financial discipline in the interest of your long-term financial wellbeing.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.

Disclaimer:

The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

Equitymaster requests your view! Post a comment on "How To Manage Your Personal Finances When Laid-Off". Click here!

  

More Views on News

How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

Jun 10, 2017

Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

Why NOW Is the WORST Time for Index Investing (The 5 Minute Wrapup)

Aug 18, 2017

Buying the index now will hardly help make money in stocks even in ten years.

Trump Takes a Beating (Vivek Kaul's Diary)

Aug 18, 2017

Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.

How To Read Your Mutual Fund Account Statement Correctly (Outside View)

Aug 17, 2017

PersonalFN simplifies the mutual fund account statement for you.

This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process) (The 5 Minute Wrapup)

Aug 17, 2017

A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

More Views on News

Most Popular

Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

Aug 7, 2017

The data tells us quite a different story from the one the government is trying to project.

A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

Aug 10, 2017

Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

Aug 8, 2017

Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

Signs of Life in the India VIX(Daily Profit Hunter)

Aug 12, 2017

The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

Aug 7, 2017

Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

More

Become A Smarter Investor In
Just 5 Minutes

Multibagger Stocks Guide 2017
Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Aug 18, 2017 02:52 PM

MARKET STATS