Twitter Layoffs In India: How To Financially Prepare For Such A Scenario

Twitter is reportedly sacking scores of its employees in India as part of its massive restructuring drive worldwide following Elon Musk's takeover of the social media company. Media reports on Friday were abuzz with developments on Twitter layoffs in its marketing and communication departments.

While Musk's buying of Twitter has been making news for all the right reasons, the sackings, including those in the leadership position, highlight the reality of the corporate world today that layoffs are common and could happen to anyone. 

The firings are part of Twitter's new owner Elon Musk's vision for the company "to attain economies of scale" and make the $44 billion acquisition viable, reports said.

Unlike Twitter's top executives Parag Agarwal, Ned Segal, and Vijaya Gadde, who are entitled to a golden parachute (a severance package) of $122 million (Rs 1009 crore), for many of us, a sudden layoff can be financially devastating. Still, proper planning can make it easier to handle a layoff. 

"Pink slips by Twitter made headlines all over the world, but it is the reality of present-day work culture. Acquisitions, mergers, and organisational restructuring can leave unsuspecting employees in a lurch. However, proper financial planning can soften the financial blow in the case of sudden job loss," says Renu Maheshwari, chief executive officer and principal advisor, Finzscholarz Wealth Manager, and a Sebi-registered investment advisor. 

Always have an emergency fund: Says Chenthil Iyer, founder and chief strategist of Horus Financial Consultants: "Your job can be taken away at any time. So, the first thing one should do is to build up a liquidity reserve that can take care of outflows for up to six months if you are in the junior or middle management level. However, if you happen to be in senior management, the time you may need to find another job with a similar profile may be longer, and hence it's advisable to keep a reserve that can take care of 12 months of outflows. These outflows include regular expenses, loan EMIs, and insurance premiums." 

But first things first. If you are short of cash, making lifestyle changes is important. "You should have a clear idea about your discretionary and non-discretionary expenses. In any such eventuality, stop your discretionary expenses immediately. That will give you enough runway to survive financially without pushing you into a debt trap," says Maheswari. 

Dig into your investments with care: In case of a layoff, one may need to dig into existing investments to make both ends meet. Maheswari suggests avoiding touching their provident funds/retirement funds in haste. "Withdrawals from retirement funds can negatively impact your long-term retirement plans," she says. You should use your funds in the following order till you find another employment. 

•    Savings accounts
•    Liquid mutual funds
•    Bank fixed deposits (depending upon maturity date)
•    Debt mutual funds
•    Equity mutual funds / Direct equity (depending on the market)

Further, she says that one should ensure they do not default on their equated monthly installments (EMIs) as it can ruin their credit rating forever.

Also, try to avoid borrowing at all. For example, if push comes to shove, you may withdraw from your retirement funds but avoid borrowing at all costs to tide over such a situation. "Such borrowings, especially personal and credit card loans, can push you into a debt trap," she warns. 

Insurance is key: "Another important aspect to take care of is to ensure that you have all insurance for the right amounts in place while you still have the job," says Iyer. This is because life and disability insurances require you to provide income proof. So once the policy is taken, it doesn't matter whether you continue receiving income. 

Iyer also stresses the importance of health insurance. Most importantly, you must have a personal family health insurance policy. Many people depend on their employers' health insurance, which won't be helpful if they lose their job. Moreover, certain exclusions in those policies apply for one or two years after taking the policy. Suppose you maintain this policy while you have the job. In that case, these exclusions will also get removed over time, and they will come in handy in case of hospitalization during your unemployed period.

While most of us may not be entitled to a 'golden parachute' if we are laid off, proper financial planning can ensure that we do not end up making a crash landing.