How To Survive A Layoff?

Layoffs have been in the news ever since the year started. According to some estimates, the Indian tech industry alone has laid off around 200,000 people in 2023 so far.

Though the pace of layoffs seems to have slowed down, it’s a situation that anyone can face anytime. In a lot of cases, this does not even directly relate to the employee’s performance.

While the older generation may have savings to back them up, the younger generation can find it difficult to cope with a job loss.

Delhi-based sales manager Moinak Saha, 26, was laid off from a leading ed-tech firm in November 2022, when he was just five months into his job after a campus placement from a B-school. He lost his job even though he had achieved his sales targets. That hit Saha hard.

“I had an education loan of Rs 12 lakh, and I was using 90 per cent of my salary to pay off the principal amount of the loan to lessen the burden on my father. He was paying the equated monthly instalments (EMIs) at 11 per cent. So, I had no savings and had to again ask my family for my daily expenses,” he says.

Most young people take education loans for higher studies or professional courses. Also, their income is usually not very high at this stage, as they are at the first few rungs of their career ladder. All this, coupled with the fact that they may also be in the process of setting up their houses and life, leaves little scope for them to have savings or an adequate emergency corpus.

In this scenario, dealing with the financial aftermath of a layoff and surviving it can be tough.

However, having a sound plan of action and practising financial hygiene can see one through this tough phase. After all, young people have age on their side, and they have enough time at hand to get over the setback.

Analyse Your Finances

The first thing one must do after a layoff is to analyse one’s financial situation. One can add up all of one’s savings—fixed deposits, debt funds and idle balances in savings accounts that they may not be using—with the severance package, if any.

Says Bhuvanaa Shreeram, co-founder and head of financial planning at House of Alpha: “If funds are a concern, relook at your budget and estimate the bare minimum expenses to get by—food, rent, utilities, travel to work, etc. Don’t forget to include EMIs and insurance premiums.

“You can skip investments for the time being. By all means, stop discretionary expenses such as holidays and parties,” Shreeram adds.

Ahmedabad-based Sukanya Mukherjee, 28, who recently lost her job as a senior content writer, modified her budget immediately after the layoff to cut down her expenses.

“As I was living in a metro city, a lot of unexpected expenses piled up on my rental furniture and ongoing EMIs, which led to major financial mismanagement. I re-examined all my expenses and cut down the extra spends, such as eating out. I also got my Wi-Fi speed reduced and was mindful of my overall spending habits. By making these adjustments, I aimed to stretch my financial resources, while actively continuing my job hunt,” she says.

Create Liquidity

Assessing your financial situation will help you decide on the next course of action—whether to take a break and look for the job that suits your skills and compensation, or compromise and jump to the next one.

Saha had to resort to the latter. “I posted on social media platforms, which helped me a little. After countless rejections, it was just impossible to explain five months of experience in the company. I took a hit in my package, which dropped by 40 per cent, and took a new job just to pay the EMI,” says Saha.

If you have funds that can last a few months, use it wisely. “Put away three months’ worth of basic expenses into liquid funds. Set up a systematic withdrawal plan (SWP), and spend from the SWP and not from the liquid fund corpus,” says Shreeram.

If you get a severance pay, use it to create liquidity. “Otherwise, it can be kept as a contingency reserve. It can also be allocated toward important goals if provisions for them have not been made yet,” says Suresh Sadagopan, founder and principal of Ladder7 Financial Advisories, a financial planning firm.

Those who do not have an emergency fund or a severance package, but have other savings, should also fix an order of withdrawal.

“FDs and debt investments, such as Public Provident Fund (PPF), which allow withdrawal after four to five years, may be used first, once the severance package that includes leave encashment and a few months’ basic salary is exhausted,” says Chenthil Iyer, founder and chief strategist, Horus Financial Consultants, a financial planning education firm.

“You may withdraw equity and equity mutual funds through SWP based on your budget,” he says.

Avoid Debt

It is very tempting to use a credit card in situations like this to maintain the same lifestyle, hoping that once you find a job, you can pay off the debt. But this should be avoided at all costs.

“This is a deadly trap. Assuming the new job will pay in line with your current job, a bloated credit card will start a downward spiral and lead you into a debt trap,” says Shreeram.

You may instead ask your friends and family to help you out until you find a new job. Also, don’t be shy of taking odd jobs like tuitions or freelance work in the interim to pay your bills and bear other expenses.

Looking for a new job and managing your finances can be overwhelming. So, it’s important that you take good care of yourself and do not end up isolating yourself.

“The shame attached to layoffs can make us want to withdraw from friends and family. However, staying connected can be more of a boon than a bane, as it helps get support, share experiences, and perhaps find solace in knowing that there are others who have faced something similar,” says Shreeya Ghag, psychologist and Mumbai-based mental health advocate.

Mukherjee, who has recently got another job, used to bare her heart to her loved ones and also started meditation to control her anxiety during that tough period.

Connecting with people through social media networks can also also help find relevant job leads. As a thumb rule, focus on what you can control at present to ensure that the future looks brighter.

meghna@outlookindia.com