Surviving A Layoff In India: Money Moves To Safeguard Your Future

Losing a job is tough, and it can shake your financial stability. But with a few smart steps, you can make sure a layoff doesn’t hit you too hard financially.

If you lose your job, you’ll likely lose your employer-provided health insurance too.

Source : Freepik

In today's world, job insecurity is a constant reality. Many IT employees have recently been given the pink slip. A tech giant has announced plans to lay off thousands of employees, sparking concerns of job loss across the sector.

Losing a job is tough, and it can shake your financial stability. But with a few smart steps, you can make sure a layoff doesn’t hit you too hard financially. Whether you’ve already been laid off or are worried about one, here are some tips that can help you stay financially strong.

Preparing Ahead of A Potential Layoff

Here are two practical things you should do right now to cushion yourself in case of a layoff:

• Build a strong emergency fund

An emergency fund acts like a financial cushion during tough times. It’s wise to set aside enough money to cover your essential expenses for at least 6 to 12 months. This fund should cover essential costs like rent, EMIs, groceries, school fees, and utility bills. Keep this money in financial instruments that are low risk and offer easy access, such as a savings account, fixed deposit, or liquid mutual fund. Don’t dip into this fund for taking care of regular needs. 

 

• Get your own health insurance

 

If you lose your job, you’ll likely lose your employer-provided health insurance too. A medical emergency during this time can quickly drain your savings. So, as a mandatory step, buy a separate health insurance policy for yourself and your family.

How To Manage Financially After The Layoff

 

• Take stock of what you have

 

Start by collecting all dues from your employer, including your last salary, unused leave payout, and any severance package. Then take stock of your savings, investments, and any emergency fund you’ve built. This is the money that will help you manage your expenses in the coming months. Use it carefully and wisely. Focus on essentials and try to stretch it as much as possible.

 

• Talk to your lender if repayments get tough

 

If you’re finding it difficult to pay your EMIs or credit card bills after losing your job, reach out to your bank immediately. Some loan agreements do require informing the lender about changes in employment status. Ask about options to reduce your burden. For example, you may be able to extend your loan tenure to lower your monthly EMI. Lenders usually prefer helping you adjust rather than seeing you default. Be open and work out a solution that keeps you financially on track.

 

• Don’t rush to break your investments

 

Losing your job is bound to raise concerns about money, which may sometimes result in impulsive financial decisions like withdrawing one’s investments. This must be avoided, unless it is compromising essential expenses. Instead, pause your SIPs until your income stabilises, but avoid exiting your investments entirely. If you need to dip into them, do it in a planned and limited way. For example, don’t redeem your entire mutual fund portfolio and instead, withdraw only what you need for the next few months. Also, avoid withdrawing your provident fund unless absolutely necessary. It's meant for your future and should be kept intact for long-term security.

 

• Make use of the insurance grace period

 

If you’re finding it hard to pay your next insurance premium, don’t panic. Most insurers offer a grace period, usually 30 days for life insurance and 15 days for health insurance. Contact your insurance provider to check the exact timelines. This extra time helps you stay covered without missing a payment.

 

• Use credit wisely

 

A financial emergency, like losing your job, is not a time to apply for new credit. Use your credit card only for essentials and be very cautious with your spending, since there is a break in regular income. If you really need financial help, consider borrowing from friends or family. Just make sure the repayment terms are clear and manageable for both sides.

 

• Consider selling what you don’t need

 

If you need quick cash, selling non-essential assets can help. Focus on items you can let go of without affecting your daily life. It can ease your financial burden and free up money for more urgent needs.

Job uncertainty is part of working life today. While you can’t always control what happens, you can control how prepared you are. Being financially ready gives you confidence and peace of mind.

(The author is the CEO at BankBazaar.com. This article has been published as part of a special arrangement with BankBazaar)