Losing a job is the last thing on anyone's mind. It occurs unexpectedly while you are unprepared and when this happens, it's common to start panicking. Stress, on the other hand, is never a productive state of mind, and you're unlikely to make any sound decisions while you're in it. Maintaining your composure is essential for both thorough job hunting and prudent financial management.
Employees across India are facing one of three scenarios as a result of the virus wrecking havoc in the job markets: indefinite leave without pay, substantial salary cuts, or layoffs. Salary cuts and job losses will undoubtedly change the way you live and spend, but if you play your cards right, you may get through the crisis with minimal discomfort. Here are some tips you can follow during a job loss or pay cuts.
Limit Your Spending
One thing has become abundantly evident as a result of the lockdown. The cost of living isn't prohibitively expensive. Discretionary spending, such as eating out, travelling and leisure, and purchasing luxury items, drains your bank account. It's a great moment to rethink your spending habits. Moving to a cheaper place to live is one method to cut down on your basic spending, especially if you're new to the job and spend a large portion of your paycheck on rent and utilities.
Refrain From Taking Out New Loans
When you're short on cash, you might be tempted to take out a loan. Don't. It may cause issues in the future. If you're currently paying back loans, choose the moratorium only if you don't have any other options. This is not an EMI exemption. After a few months, you'll still have to service it (with additional accrued interest). When you're short on funds, another option is to tap into your Employees' Provident Fund (EPF). You can withdraw up to 75 percent of the balance or three months of your basic income plus dearness allowance (whichever is smaller) from your EPF account as a result of a pandemic.
Look For Other Sources Of Income
If you're struggling to make ends meet due to a wage cut or job loss, you can consider monetising your skills and hobbies to supplement your income. You can also persuade some of your financial dependents to contribute, such as your spouse.
Make Provisions For Liquidity
You may find it challenging to service your monthly investments at this time. If your short-term goals involve discretionary spending, consider deferring them. Build an emergency fund, or increase to one if you already have one, if you think you'll be able to manage your present liabilities even with a salary cut. It's also a good idea to go through your insurance requirements again.