Out of a job? Buckle up and stretch your money to sail through the tough phase

• Tracking your spending using budgeting apps can help you identify areas where you can cut costs and save more effectively
  
• In case you are not able to pay your EMIs on time, communicate with lenders and seek deferment
  
• You may withdraw from your provident fund or take a loan against, gold, mutual funds or FDs
  

For those of us who earn a salary, a job loss can come as a big shock. There are expenses to be met, EMIs to be paid and so on. Months without an income can seem like a nightmare. Getting a new job can also take considerable time. But job losses are a reality that many of us may have to face during an economic slowdown.

It is for emergencies such as a job loss that financial planners recommend that one has an emergency fund in place. If you have one, that is good news, but in case you do not have any or have an inadequate emergency fund, it may be more difficult. However, you can still navigate the situation with careful planning.

See where stand and cut down on expenses

When facing financial insecurity, it's vital to promptly take steps to stabilise your circumstances. Start by performing a comprehensive evaluation of your financial status, which entails checking your bank account balances, upcoming expenses, savings, expenditures, and outstanding debts.

Give priority to crucial expenses like rent, EMIs, utilities, groceries, and medications, while also exploring methods to cut back on unnecessary spending, such as dining out or entertainment. If you plan carefully, discretionary expenses can be cut down quite a lot, as required.

“Tracking your spending using budgeting apps can help you identify areas where you can cut costs and save more effectively,” says Jay Shah, CEO and Founder of Finwisor, a wealth management firm.

At the same time, consider exploring additional income opportunities such as freelance work to supplement your earnings.

Ensure that you meet commitments like EMIs and insurance premiums

Payment of EMIs and insurance premiums need to be your top priority. “In case you are not being able to pay your EMIs on time, communicate with lenders about your situation. They may defer payments. Prioritise payments based on consequences of defaults in case you aren’t in a position to pay all,” says Soham Bathwal, Founder & CEO of Dhanvesttor, a wealth management firm.


This is the time to dip into the emergency funds that you have. If you have a mutual funds corpus, that can be put to use. “If regular income is needed, set up a systematic withdrawal plan preferably on your debt/ hybrid funds,” says Bathwal.

How to get access to funds in case of a shortfall

If it comes to the point that you have run out of your emergency funds and need funds to meet your expenses, there are several options to consider.

“One option is to utilise your provident fund savings, taking advantage of the government's provision allowing withdrawal of up to 75% or three months' basic salary and dearness allowance. This can provide immediate relief for covering essential expenses like EMIs until you secure a new job,” says Shah. A loan against fixed deposits, gold, or mutual funds may also be considered.

Additionally, borrowing from family and friends can offer a supportive network without the burden of interest payments. If needed, consider tapping into your investments by breaking fixed or recurring deposits to access funds with minimal interest rates. By carefully evaluating these options and combining them as necessary, you can navigate the financial challenges of job loss with greater ease and stability.

Use this time to assess career goals, update skills, and explore new job opportunities or career paths. Remember, that tough times do not last, tough people do.