MUMBAI: Losing your job is a nightmare. It may seem difficult to recover from such a bizarre event. During a challenging period like this, it’s imperative that you pull yourself up, dust yourself off, and work on a plan that will minimize your financial stress. This process will add some stability to your life and create mental space to find solutions that can work for you.
Here are some practical steps you might consider in order to maintain financial stability as you work.
Check your budget
It is important to keep your expenses under control during these times. Have a strict budget and categorize all expenses as either necessities or nice things. While expenses such as groceries, rent, utilities, etc. have priority; For the time being, you might want to reevaluate the need to have multiple streaming services or buy new technological equipment.
Prateek Mehta, Co-Founder and Chief Business Officer of Scripbox, said, “While reviewing your budget, you should have an honest conversation with the family. Make them your allies in managing expenses. This process would help you reduce non-discretionary spending. It also allows you to better use your resources to maintain liquidity and improve savings. “
Use your emergency savings
Building an emergency fund is important to a solid financial plan. If you have been diligently putting money aside for your emergency savings, this is the time to put it to use.
“About 10-15% of your corpus can be in the form of cash in bank form, while the rest can be stowed away or converted into a liquid fund. This planning further helps in generating some returns and can be easily accessed when needed. Avoid investing in stocks for short-term gains as the risk involved is high. An ideal emergency fund should cover you for 6-12 months, “Mehta said.
Refrain from delving into your investments
While times can be difficult, avoid delving into your investments unless the situation is dire. Remember, it takes a long time to build up savings and hardly any to use up. Liquidating investments can have a significant impact on your long-term goals, such as saving for your children’s education or your retirement savings.
If possible, check whether you can take over the financial reins with your spouse or another family member for the time being. Alternatively, if you receive a severance payment, a small portion can be used to manage the expenses, while the rest can be used for your emergency fund.
Be careful before you borrow
Remember that every new loan you take out can have high interest rates, which will eat up your savings and add to the repayment stress. Prioritize critical existing loans like mortgage or auto loans. Then, consider paying off other high-yield debt or, alternatively, refinancing with a single loan.
Also, use credit cards sparingly. Take advantage of the interest-free loan window and make sure that you pay the amount due in full and on time. Unpaid credit card fees can increase quickly and further deteriorate your credit score. They are often between 36-45% interest.
Discover the gig economy
“Use your free time productively by looking for an additional source of income. If you have certain skills, you can look for freelance appearances, part-time counseling opportunities, or even monetizing your expertise by creating online resources through blogs and videos. In today’s digital world, it’s also the best way to be seen and heard, “said Mehta
“While it may be tiny, having a new source of income will not only help offset some expenses, it will also help your sanity and self-esteem,” he added.
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source https://dailyhealthynews.ca/how-to-manage-your-finances-if-you-have-lost-your-job/
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