6 Ways to Manage Your Finances If You Get Fired

Posted in Investment By Sajhyadri Chattopadhyay - Feb 22,2023
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“Hoping for the best, prepared for the worst, and unsurprised by anything in between.”
― Maya Angelou 

Losing a job is one of the most stressful situations we can come across in our life. It is a feeling that tens of thousands of employees have gone through over the past few months. So many facets of our financial stability are interlinked with our employment that the sudden jolt of a pink slip can feel like someone pulled the rug out from under our feet. There’s so much to analyse at the same time.  

From running your household to paying your bills, so much to do without any financial security. In this situation, workers often have to take numerous hard financial calls while battling the emotional baggage. All through, one unnerving reminder keeps jabbing at the back of their heads: unemployment. Agreed, it is difficult, but we must try to keep our feet grounded, take a step back, and follow certain steps to efficiently manage our finances.  

1. Take Stock of Your Finances

After unemployment strikes, examine your finances closely. It is important to know what you have saved up, what bills you need to fill and so on. Consider what investments and assets you can liquidate to tide you over in this time of financial crisis. With some luck and planning, you’ll have something stored up somewhere for a rainy day like this. Similarly, take stock of your expenses, and prioritise the unavoidable ones like rent, food, utility, and healthcare bills. After this, you’ll be able to make a budget and money management plan with respect to your expenses and savings.  

2. Note Down an Emergency Budget

Whatever spending and investing plans comprise your well-oiled financial engine, a job loss can throw a spanner into the works. This means that the meticulously planned budget you were following till date will not work anymore and you need to create a new one. To begin, weigh up all the incoming payments you expect or hope to support you, including your partner or family’s income, unemployment insurance, severance pay, etc. Next, review your expenses and hold off on whatever you can till you regain a monthly income source. This will also reveal areas you can save on

3. Look for Affordable Credit Options

With your income being negligible or nil, it might seem like an easy excuse to make purchases and payments using your credit cards. It is very important to refrain from this behaviour as much as possible. Credit card debt can pile up faster than you can say “oops”, and you will have to pay the sum back at a higher interest. Instead, keep a separate low-interest credit card handy to make purchases in such times. Look for offers that can shave off even a little from your final bills. Also consider your borrowing options as an alternative to using credit cards.  

 4. Dig into Health Insurance Options

Ask the appropriate departments and authorities at your recently departed company about the procedure for shifting to an individual health insurance policy from a group health policy. You can also port your company’s group health insurance to a personal or family floater plan under the same insurer, in accordance with IRDAI’ portability guidelines. This ensures that you don’t lose your credits and benefits attained under your earlier policy. Plus, the waiting period (for stipulated pre-existing diseases) that you have already completed in this group policy is also transferred. However, remember to submit such a porting request to your insurer 45 days before your policy expires.  

5. Look for Alternative Income Options

Finding another full-time work out of the blue is easier said than done and could also take you months. Hence, it will be wise to re-evaluate of your career aspirations and rethink the option of switching industries, at least temporarily. Update your resume and work profile on professional social media sites, scan the job market keenly and reach out to your corporate contacts and other acquaintances. In the meanwhile, consider taking up a part-time gig to help ease the pressure on your savings. There are a variety of part-time or daily income employment opportunities from content writing to customer service that can earn you money even from your home.  

6. Apply for Unemployment Relief Packages

In India, workers with a maximum monthly wage of ₹21,000 are eligible for an additional unemployment allowance. The Rajiv Gandhi Shramik Kalyan Yojana (RGSKY) provides these benefits under the umbrella of the Employees State Insurance (ESI) scheme. As per the terms, laid off employees who have been employed and insured under the RGSKY scheme for a minimum of 2 years can get financial assistance amounting up to 50% of their average wages for up to two years. File for a claim for your unemployment benefits immediately after losing your job since it takes a while to get the first check. Moreover, you can browse for several customised or exclusive insurance products that some financial platforms offer. These small-token services will provide you with some relief from the sudden financial strain. 

Expecting Mothers Take Note

The Maternity Benefit Act, 1961 makes it illegal for employers to terminate the working contract of a woman who is expecting a child. As such, they cannot be fired or served a discharge or dismissal notice for not coming to work during this period, according to the law. It is unlawful for any company or employer to dismiss or discharge a pregnant worker for taking a maternity leave or when they are absent during such a period. The same security applies to her missing work due to her pregnancy, or any related illness.  

Moreover, her employer cannot change the terms of her employment to anything that can cause her any disadvantage. Section 12 of the Act also states that expecting mothers have the right to come back to the same job role and position after availing her period of maternity leave. The Act also entitles every woman to payment of her stipulated salary or average daily wage up to 26 weeks, effectively six months. This duration includes the period of leave before and after the mother’s delivery. It is important to know these rules to safeguard your financial benefits and other rights as it protects you from being unlawfully fired.  

Ready for a Rough Day?

Don’t cry over spilt milk. Prepare in advance and manage your finances accordingly to avoid taking to the streets in case of a job loss. Don’t dig into your retirement corpus. Save up in an emergency fund beforehand, ideally one that grows over the years by amassing returns. Look for options like Fixed Deposits to earn a decent interest on your saved-up sum. Ideally, you should also have some short-term assets and investments handy to serve as a secondary layer of financial protection.  

Such products like debt mutual funds will make sure that you do not have to dig into your long-term assets after your savings dry up. In case your company does not provide any severance pay package, you can also check out a number of insurance products like a Loss of Earning Benefit or an Income Loss Cover exclusively from Bajaj Markets to secure your day-to-day financial needs. Don’t wait for misfortune to strike; start planning your finances today by setting up an emergency fund that covers all the bases of savings, investments, insurance, and so on.  

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