- July 17, 2017
- Category: Financial Planning
The recent incident where a Tech Mahindra employee was fired over the phone was shocking. In the exit interview, the employee was threatened to quit on a day’s notice failing which he would not get the experience letter and basic salary. Job layoffs are a reality in today’s world. It is not just about the pink slips but the way they are handed over to employees in short periods, not giving then appropriate time to hunt for other opportunities.
Job layoffs can happen to anyone and at any age, be it a person in his young working years or top/middle level manager with at least 10-15 years of experience. The problem is most of us do not think of this possibility till we are actually fired. If your company one day decides to undergo cost optimisation, you could be in the firing line even if you are performing well. What if you, the primary wage earner of the family is indeed laid off? What should you do if you are not prepared? Here are a few tips to deal with a layoff:
- Assess your finances: The first thing you need to do is take stock of your finances. Evaluate your savings including your settlement pay, emergency fund, if any, investments (the ones which you can liquidate easily), etc. Calculate your monthly expenses and get a rough idea of your total savings on which you can survive without a job. This exercise would help you avoid panic and any unnecessary impulsive financial decisions.
- Curtail monthly bills: In the absence of income, the obvious thing to do is to relook at your budget a lot harder. Determine the basic minimum amount you would need to cover your household bills. Look at a way to reduce your bills, the ones you can do away for a temporary period. Change to a cheaper mobile plan, cheaper broadband package, restrict use of vehicle to save on petrol, avoid lifestyle purchases, restaurant meals, movie plans, etc. In order to build on savings, postpone big spends which you were planning for a long time.
- Managing fixed obligations better: Loan instalments, insurance premiums need to be paid on a regular basis no matter what. There is a way to manage them wisely though. Besides cutting down on expenses, you can stop your existing investments like recurring deposits, SIPs in mutual funds for a temporary period and redirect the saved amount towards paying loans & insurance premiums. Further, you can contact your bank and ask for a reduction in EMI amount and increase the loan tenure instead for a temporary period. Also, in the case of servicing life & health insurance premiums, you can stagger the payments by changing the frequency from annual to quarterly basis. However, do not make the mistake of stopping your life & health insurance policies.
- Considering loans during emergencies: While it is not advisable to take on debt in a job loss situation, relying on credit might be necessary when finances are too stretched. If you are considering a temporary loan to meet the shortfall, there are options like taking a loan against insurance policies, gold, fixed deposits, etc. It is prudent to take loan against investments during emergencies rather than a personal loan which is comparatively more expensive.
- Settle for a part time job: Not having a regular salary stream can pinch a lot when it comes to managing expenses with limited money. While your primary aim is to hunt for a new job, there is no harm in settling for a part-time job for a temporary period. If you are good at writing, you can even take up freelance projects from home. Even a small inflow can be of great help to ease your stretched finances.
- Increase networking: Update your resume and send it out to people who can help you in job search. Contact people on professional networking sites. Attend job fairs & be open to explore new opportunities. If you shared a great rapport with your ex-boss, do not hesitate to approach him for a good recommendation letter. He may also be a reliable source of reference for your new job.
- Upgrading your skills: Understand the requirements of the job market when you hunt for a new job. Analyse whether you have those requisite skills or you need to upgrade them to keep pace. It is also time to introspect whether you want to continue in your field or change your scope of work completely. Learn a new language or a programming, or tally software, etc. There are many online certification courses available too. Upgrading your skills can improve your chances of landing a new job of your choice.
To conclude, losing a job unexpectedly is stressful both financially & emotionally. You can survive layoffs if you take the right steps and seek assistance when available.