The lockdown implemented in the country has increased until 3 May due to the Coronavirus. Most employees of almost all sectors are facing pay cuts in the lockdown. This is a difficult time for all and circumstances beyond our control. Our life is definitely affected by the reduction in salary, but if we take care of some special things and make good planning then we can reduce this pain.
- Most employees of almost all sectors are facing pay cuts in the lockdown
- Control on your extra spending in this situation of lockdown
- You can search for others sources of income in this period of lockdown
Dev Ashish, founder of stableinvester.com, says, “There is no doubt that this is a difficult time, but you should be satisfied that at least you have a job, while the employment of millions has been lost.” He suggests that we should take some decisions so that we can get out of this phase easily without putting much stress on salary cut. Let us know some tips for this.
Control on Extra Spending
Dev says in lockdown you must have noticed that there is not much expenditure on the forgotten necessities of life. We spend more on eating out, traveling, luxury items and hobbies. Our expenses have been halted by the lockdown. It is easy to identify what our basic needs are right now. Therefore, after salary deduction, you have to focus on these requirements only.
You should prepare a list of your expenses and avoid those which can be avoided or prevented. Shweta Jain, CEO of financial planning firm Historiography, says that if you spend more than a credit card, it is better not to use it now. If you have started your career a while ago and spend a large part of your salary on house rent and needs, then it is better to look for a cheap destination after lockdown.
Revisit your goals and Investments
Are you planning to buy a car or were thinking of renovating the house? Now you have to rethink your goals due to salary deduction. You have to think that the item you wanted to spend money on is very important or avoidable. Jain says, “If you can postpone your goal, save money by doing so.” The more you save now, the more you feel safe.
Dev says if you have some money left after basic expenses, then think of investing it only. He says, “If you are unable to invest now because of lack of money, then there is nothing. You can stop investing for a few months. Liquidity is the king right now. Investments can be resumed after a few months when things return to normal.
Don’t Take Loan
If your salary is getting cut and you want to take a loan to reduce its effect then stop yourself from doing so. Because the present time is full of uncertainty, it is not wise to increase the financial burden on ourselves. Think if this round continues for the next few months, then how will you be able to pay EMI along with expenses from next month? Jain says, “Do not choose to take a loan to continue unnecessary expenses, because we are not sure about the future.” In this case, keep the liability to a minimum. If you are facing difficulty in the current liability, then you can choose a 3-month loan moratorium.
Search for others Sources for Income
If you are facing salary cuts then looking for some other income routes is the best option. You can make your qualification or hobby a source of income. Online tuition, hobby class or teaching a foreign language are some examples. Says Jain, “Doing something in such a stressful environment that earns you income also helps you stay positive and it’s like a bonus.”
Always Prepared for Emergency Situations
Right now it is facing a cut in salary, but if the economy continues to slow down, then large scale layoffs can happen. At present, it is also reminding us why we should always be prepared for any health related emergency. Jain says, “Are you financially ready if you fall ill?” What if you lose your job? Do you have insurance or are you dependent on the insurance from the employer. Look at your need for insurance. Also, if you have not created an emergency fund, start it immediately. Financial advisors say that we should create an emergency fund equal to the expenditure for six months.
This is a difficult time for all and circumstances beyond our control. Our life is definitely affected by the reduction in salary, but if we take care of some special things and make good planning then we can reduce this pain.