A job loss can be tough, both emotionally and financially. The initial shock and panic need to give way to planned and careful thinking especially where it concerns your daily expenditure. Here are a few pointers.
Get your severance sorted
Though you may wish to give vent to your emotions, trash-talking your company or superiors in this anger will only harm you. It is important to get clarity on your severance package or any ‘Golden Handshake’ the company can offer you. This should be as skilfully negotiated as possible as it will become the base of your emergency fund. Leave the company on good terms, as it can hire you again on a subsequent occasion or recommend you to other employers.
Create a plan
Create a plan that is in sync with your goals and fits your current situation. List out your goals and then align your investments to them. For instance, if you need money to pay down debt within the next 2-3 years, do not invest in long-term assets like equities. For recurring expenses or EMIs, you may have to liquidate your assets while you are still unemployed. You can go through our guide to mutual fund redemptions here.
Lose the extra financial weight
Look for regular expenses that you can trim. Get rid of unused memberships such as gyms and clubs. Try to tone down your energy consumption. Instead of driving down, you can opt for carpooling or start using public transportation. Skip expensive restaurant dinners. All these things will ease the monthly pressure on your wallet.
New sources of Income
You don’t have to scan every job advert but you can keep a lookout for ways to supplement your existing income. For instance, consider short-term employment projects or freelancing jobs for additional income. If you have a spare room in your house, you can rent it out through apps such as Airbnb.
Have only good debt
My definition of good and bad debt is slightly different from that of an accounting textbook. As I define it, ‘Bad-debt’ is money which you owe for consumer items or anything that doesn’t improve your financial situation. ‘Good-debt’ is income producing or money-saving debt such as borrowing for education or housing.
Shop at outlet stores or thrift stores. Sale seasons, e-commerce offers, discount coupons and the like can save you a packet.
You can live a decent lifestyle on a small budget. Doing this is more about attitude than numbers. An important task for all who want to live a quality life is to eliminate as much wastage as possible, with the end goal of making room for things that really matter to you. Having money in the bank, good health, a secure retirement and fewer possessions are some benefits of living lean. Give them a try and you might find your life is rich again.