Microsoft, Google,?Dell, HP, Twitter, Morgan Stanley, Goldman Sachs,?Disney, and Meta. These are some of the biggest organisations that have announced mass layoffs in recent months. The number of affected employees has already surpassed one lakh in the first six weeks of 2023.
No matter how highly you performed or for how long you have been associated with the company, the layoffs have affected most types of employees across organisations globally.
The shock of suddenly getting laid off pushes us to just pause and look at the lessons we can take from these mass layoffs, which are equally important for those who have been impacted by layoffs as well as those lucky ones who haven't faced the axe yet.?For the former group of people,?you can at least make this adverse event of layoffs count by learning the lessons and implementing them in your life.
Given that mass layoffs affect our finances to a great extent and even put our financial future in jeopardy, let us understand what money lessons we can take away from mass layoffs.
Call it our casual nature or laid-back attitude, but seldom do we think of a day when our income could suddenly stop.?That is why many of us end up taking our income, whether we are salaried, self-employed, or professionals, for granted. And these mass layoffs have been a big reminder for us to never take our income for granted, right?
Even if you had been taking your income for granted till now, it's time to stop and learn from the mass layoff wave. These mass layoffs are a reminder that income can't be permanent in life, but perhaps expenses can be.?
So, it's better to cut down on unnecessary expenses or indulgences and instead save that money. After all, money saved is money earned, right?
Remember that no matter how small those expenses may be, such as a daily coffee order, movie outings, or any other expense, try removing or trimming down on these expenses, which will in turn reduce your monthly budget and help you manage your hard-earned income in a better way.
Also Read:?How To Be Financially?Prepared?Amid Mass?Layoff?Wave
If the past three pandemic-hit years weren't enough, then the sudden and mass layoffs have reemphasized the absolute necessity of having an?adequate emergency fund in place.
If you are lucky enough to not have been laid off yet, it's time to strengthen your finances amid the layoff wave by creating an adequate emergency fund if you donˇŻt have one yet. Even if you have been laid off, the most important financial lesson you can learn from layoffs is the importance of having a rainy day or contingency fund.
Ideally,?an amount equal to at least six times your recurring monthly mandatory expenses should be kept in your emergency fund. However, you can have a larger fund, such as one for 09 to 12 months' worth of expenses. After all, the bigger, the better!
As far as your mandatory and recurring monthly expenses to be included in this fund are concerned, these can include rent, utility bills, insurance premiums, childrenˇŻs education fees,?loan EMIs, etc. So, instead of waiting for another wake-up call like these layoffs, start building your emergency fund as soon as possible.?
The emergency fund can turn out to be your financial best friend and a cushion to fall back on whenever a financial emergency arrives and impacts your income.
All of us work hard every day to earn money for ourselves and our loved ones. This helps?us live a comfortable lifestyle, right? But working hard to earn money isn't enough to build wealth.
For wealth creation, you have to make your money work for you as well instead of letting it sit idle?in your low-interest savings account.
That is exactly why you should keep?investing, no matter how big or small the amount is. After all, something is better than nothing, right??So, while you keep on working hard to earn, ensure to simultaneously make your money work for you by investing in different asset classes as per your risk appetite.
In this way, when faced with a financial emergency, such as a layoff, your investments and accumulated wealth can come in handy.
Also,?while investing, always have liquid investments included in your portfolio. Although?PPF?and?real estate are among the most popular investment vehicles in our country, these do not offer a high degree of liquidity. So, instead of investing in these avenues, especially a major proportion of your portfolio, it can be wiser to shift or at least have a significant part of your investment portfolio kept in highly liquid instruments, like savings accounts and FDs with high interest rates, such as those offered by small finance banks and some private sector banks, and mutual funds such as liquid funds.
If you want to invest a small amount but on a regular basis in a disciplined manner, you can opt for mutual fund SIPs.?Click here to learn about SIP's benefits.
Also Read:?Explained: How Apple Has So Far Avoided Mass?Layoffs
For updates on the evolving world of work-life across the globe, visit our new section "RESET."