If you’ve been retrenched because of the ongoing pandemic or are anticipating it, here are some tips to manage your finances during this difficult period.
As layoffs and furloughs continue with the ongoing pandemic, the number of people unemployed has increased disproportionately to the number of job vacancies. More than ever, people across the world are facing unemployment, furloughs and leaves without pay owing to the losses this pandemic has created for companies across sectors.
If you’ve lost your job recently and have little to show as savings, here are some quick steps you’ll need to take to prevent yourself from sinking into debt. Remember the sooner you sort things out, the faster you will bounce back.
Build An Emergency Corpus
The importance of an emergency corpus cannot be stressed enough. Ideally, it should constitute six months of your monthly income. It is for situations like retrenchment or unemployment that you would need an emergency corpus. If you don’t have an emergency corpus already, you can start saving up for it now by earmarking 20% of your income every month for it.
While you’re still building your emergency corpus, you will need to figure out in the time being how you can live on an emergency budget until you find a new source of income. A good place to start is to calculate the limit on how much you can spend per day if your current savings were stretched over six months.
Additional Reading: How To Use Your Emergency Fund Because Of A Job Loss During COVID-19
Make Smart Purchases
With no income flow, you can no longer afford to skip checking the price tags of things that you buy everyday. Start by reviewing the groceries and other essentials you buy every week and look to see if you can find their cheaper alternatives online. Set up notification services so you know when essential items like toiletries, food etc. are being offered at a discount.
Avoid making spends using a Credit Card or Personal Loan during this time. If you have to avail credit at all during this time, ensure that you repay the amount in full and before the due date. Interest rates will add to your payment burden which you cannot afford at this point. Once you’ve zeroed in on a list of places you want to buy from and your mode of payment, stick to it no matter what.
Review Your Insurance Policy
If you have an insurance policy, now is a good time to check with your insurer on the next steps. You will need to ensure that your policy doesn’t lapse during this time as you will need an insurance cover now more than ever. You might have to switch policies if you can no longer afford existing premiums. Speak with your insurance agent to help you find an alternative during this time that will minimise your impact of switching policies.
You may also have to review your long-term financial plans given your current situation – this could mean selling off some of your existing assets to provide for you for the time being. Remember to always consult a financial adviser before you go through with this decision.
Additional Reading: How To Get A Credit Card If You Don’t Have A Job
Find A Second Source of Income While You Job Hunt
This should be on your to-do list straight from day one. Most of us dismiss opportunities for earning a side-income if they don’t match our career skills. Send out emails or messages to your friends or relatives asking them if they need a tutor or help with some job. Do not be too hung up on the issue of skills – you will seldom find side-income opportunities that are a true match for your qualifications. If you’re an MBA grad, but someone is paying you to mow their lawn – do it! Save your true skills and expertise for the true job hunt. Side income is what people pay you for doing grunt work while you’re looking out for a job.
Take Time Before You Say “Yes” To The First Job Offer You Get
When you’re retrenched, it’s only understandable that you’re in a state of panic and desperate to accept the first job offer that comes your way. These could often include low-paying jobs that could destroy any semblance of work-life balance in your life. So before you accept any job offer during this period, give yourself a three-hour time period to think it over before you accept any new jobs. Jumping into a new job out of fear could mean that you’re stuck with lower pay for the next few years
In need of urgent cash? You can avail a Personal Loan or Credit Card right from your home via a 100% contactless, online process. Remember to pay your dues on time though!