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The worst part of the whole scenario is that no one knows how long the
pandemic would last. The most severe job losses may have already happened, but
that doesn’t mean more employees won’t be getting “Release Call” from
their employer. The economic fallout of the pandemic has led to widespread job
losses and pay cuts, and countless might be finding it challenging to get a new
job with better or even similar perks during this lockdown. However, a crisis
like the one we currently find ourselves in requires calm nerves and not
panic-stricken decisions. If your income has seen a decrease during the ongoing
phase, you need calm nerves to take stock of your finances and make some
critical readjustments if required.
A pay cut comes with an overhaul of the living and spending norms and
individual followed for years together. Smart strategies could assist us tide
over the catastrophe without much hassle. Considering the rosy part of the
picture, the ones who were fortunate enough to retain their find solace, unlike
millions of other people who have lost on employment.
What becomes essential is to take the pay cut personally and devise a
feasible chain of actions including mentioned below, which could help one heal
from the situation faster.
Keep maintaining your emergency fund.
A fund needs to be ready you can dip into this in case of an emergency like
a job loss. The main reason behind having an emergency fund is to cover your
fixed costs for a certain period. Note that, your emergency fund should at
least last you for the six months. However, this depends on the industry you
are in, and whether you are a single bread-earner or part of a double income
family. An emergency fund by investing in a systematic investment plan (SIP)
for 6 to 12 months should be there. It should be invested in funds keeping in
mind the liquidity of such investments so that it is ready as and when the need
arises.
Look over your monthly expenses and find
ways to cut back
After tapping into your emergency savings, your next step should be looking
over your monthly costs and finding ways to cut back.
You’ll have to keep paying nondiscretionary bills such as rent, utilities and
groceries. Still, other added expenses that aren’t crucial to you or your
family’s survival — from online subscriptions to meals and entertainment away
from home — might have to take a breather during a spell of unemployment.
Take moratorium support only if you have
a clear plan to achieve normality
If you’ve been servicing a home loan, you might opt for the moratorium
facility for some temporary relief. However, since interest charges will
continue to accrue during the moratorium period, opting for it could lead to
tens of EMIs being added to your loan, especially if you’ve recently started
repaying your loan.
So, ensure you have a plan in place to be able to repay this accrued interest
alongside your regular EMIs soon after the moratorium ends by making adequate
prepayments.
Balance the risk profile of your existing
investments
If all your assets are in equity and or risky debt funds, you may have
suffered losses in the past few months. You don’t want to take out money,
hoping the market will recover, check how far away your goals are. If they are
a good ten years away, it might make sense to stay put, significantly if you
are investing through SIPs.
If your goal is just a year or two away, you should start a systematic
withdrawal plan to retrieve the money. It’s a good idea to invest in government
bonds and secure debt funds with AAA-rated securities for capital safety.
Remember to always have a diversified portfolio with investments in equity,
bonds, gold and cash so that your losses minimum during volatile times.
Keep your insurances going
At no cost can you stop paying the premium for your insurance. Even in such
a case of a job loss, you have to try to keep your insurance policies active by
paying the premium on time. If you have been relying only on your health
insurance policy provided by your employer, know that in the case of a layoff,
both you and your family will be without any insurance cover. According to
experts, one should have the essential mix of health cover, adequate life
insurance, and a super top-up policy.
Conclusion
Losing a job is an unpleasant feeling; however, you need to move on as well.
To begin with, ensure you’ve updated your resume and uploaded it on relevant
job portals and have started reaching out to your contacts who can help you
land another job. You can also use the time in between to upskill yourself,
preferably using an affordable if not free online course or certification
programme, for better job prospects. Meanwhile, also try to look for ways to
monetize your skills and hobbies.
These could be taking up freelancing projects or online tutoring among many
other things. Any additional income at this stage could be of great help. More
importantly, it would boost your confidence and help you get over the shock of
an unexpected job loss. Challenging times demand tough decisions. It is how
pragmatically we deal with them that decides how quickly we can emerge out of
it. A little planning would help us significantly to come out of this crisis
with minimum damage.