It is a season of layoffs with most tech companies shedding manpower to opt for leaner operations.
Being ready for a pink slip is now not a matter of surprise. The only safety you can create against a financial tight spot is by building an emergency fund to help you tide over until you bag a job again. An emergency fund should be about six months of your salary, ideally or at least it should be able to cover all your expenses for three months.
Here’s how you can start:
Make a fair estimate of how much you can save
Make a realistic estimate of how much you can save each month. To build an emergency fund, you may require financial discipline that requires you to keep aside a certain amount of money at the start of the month when you get your salary. the sooner you start this journey, the better.
Escape the abyss of unnecessary expenses
That cinema ticket, dinner outing, or fancy coffee may seem innocuous, but the cumulative effect can be financially devastating. Spending just Rs 2,500 a week on dining out adds up to a staggering Rs 1,30,357 a year – funds that could be directed towards essential payments like credit cards or car loans. Recognise the gravity of this mistake from the get-go. Every rupee saved becomes a weapon in your arsenal against a crisis.
Break free from endless financial obligations
Premium gym memberships, OTT subscriptions, and cable television may seem harmless, but they incessantly drain your wallet without offering any tangible ownership. It is an endless stream of monthly payments. Embracing a lean lifestyle can empower you to ramp up on savings and shield against financial strain during lean times.
Liberate yourself from debt dependence
Credit cards have become ubiquitous for essential purchases. However, relying on them subjects consumers to exorbitant interest rates on groceries, fuel, and countless other expenses. This imprudent financial habit drastically inflates the cost of purchased items. Frequent credit usage increases overspending, leading to a precarious cycle of debt accumulation.
Escape the illusion of automobile luxury
If you want to splurge on the latest car and the latest phone frequently, you are obviously setting yourself up for permanent cash crunch because of your commitment towards EMIs.
Trading in cars every few years results in continuous financial losses. Go for fuel efficiency. Also budget your purchase by leaving out a safety net.
Avoid the debt vs. saving tradeoff
Swapping savings for debt settlement may seem like a clever move, but the consequences are far from simple. Tapping into retirement funds or other savings jeopardises future financial stability. High penalties, fees, and the loss of compounding growth potential are just a few of the pitfalls. Freshers must tread carefully and prioritise establishing a separate emergency fund to navigate debt repayment without compromising their long-term financial well-being.
Create a small fund and keep growing it over a period of time
It is not possible to grow the amount right away. A good way to start is by building a small corpus and adding to it frequently until you build your safe deposit to take care of your exigencies.
