Recently,  I came across lots of posts in LinkedIn with news of loss of job in many startups as well as mass layoffs in some of the largest software companies like Alphabet , Meta etc. The same is also widely being published in various news prints and electronic media. Almost 11000 alone were fired by Meta and the cumulative number of job losses would be in lakhs. 

My sympathies with the ones who have lost jobs without any hint of such a bad news striking them at a speed of light. The social media has many post with request for job opportunities. 

In this entire turns of event , I feel there are a few points one should seriously introspect. Why ?? 

My first inference from this eventuality is that “Problems always come uninvited and problems do not wait for our good times to knock our doors”. 

Why is it that professionals who are paid so well , even after 5 to 10 years of their careers,  once such an eventuality strikes them , they get so worried about paying their bills and EMIs ? Why is that they are worried about managing their house expense and school fees?  

It is high time for these IT professionals to start thinking that , “Why is that we have not been able to manage these minimum recurring needs of at least 2-3 months without any strain or worries in spite of having worked for 5 to 10 years.??” 

Have you ever thought, “ What would happen when I retire? The period when I will not be having any active income , then how will I be supporting myself and my family for next 20 to 30 years of my retirement ? Is this why I have been working so hard throughout? ”  

We all will agree to the fact that the average life span of human is increasing due to the advancement in medical technology and also the fact that Inflation or the cost of living too is increasingly day by day , whether we like it or not.  

My interaction with many people in the field made me realise that as well paid employees having consistent salary income have fascination of buying properties , taking exotic vacations,  buying luxurious goods on home loans , personal loans and Credit card loans. It’s great to have a lavish lifestyle.  

But there’s a debt trap that’s being laid by your banks and the shopping & holiday portals.   

The only loan that I feel is good for one’s financial health is a home loan for a dwelling house that helps saving on rents and taxes. 

The simple reasons of getting into these debt traps are more emotional then logical. Whenever one books a property on loan, the feeling of being a star in the family gives an adrenaline rush . Moreover appreciation by in laws  on this achievement makes one feel so important, that we often tend to ignore the demerits of owning that prized asset. 

A pressure to flaunt your photos of exotic vacations and luxurious goods on the social media along with a nudge by travel and shopping portals to go for one notch higher destination or brands adds to the woes. This forces one to live from paychecks to paychecks, due to over spending.  

That was the problem statement so far. What next? 

Can we rewind time ?? No . RIGHT!! 

But we can always learn from all our challenges and situations.   

A mistake done repeatedly is not a mistake, it’s a decision  .  -Paulo Coelho 

Ups and downs are parts of life and the down cycles are the biggest teachers in life. 

Coming back to a few quick hacks to improve your financial lives immediately.  

  1. First things first, prepare a survival plan for next 6 months. 
  1. Parallely, clear all your high interest bearing loans by disposing stuffs that you don’t need. 
  1. Start writing your income and expenses and make a note of expenses  which are discretionary  
  1. Liquidate assets that are not fiscally prudent to raise cash levels . 

A small and simple change in one’s life can make an impact of great magnitude in the coming times. Manifest in your mind that Life is about happiness and inner peace and not a show off in front of family friends and in laws 

Once the dust settles down, start working on following points. 

  1. Maintain 2 accounts one for expenses and other for savings. As the salary gets credited , move 50 percent to the expenses account and 30 percent earmarked for savings. Enforce discipline In spending. 
  1. Start funding for 6 months contingency/emergency funds so that you are ready for any emergencies by transferring any excesses in your expenses and savings accounts. Once you have 6 months funds ready  , transfer excess of expenses to saving.  
  1. Re evaluate your life and health insurance needs.  Remember we often tend to be too optimistic when it comes to insurance . My father always said me one things the best day to buy life insurance is 1 day before death or Now . The choice is yours . 
  1. Create a list of all goals and responsibilities that you need to fulfill. Start acting on them accordingly. 
  1. Remember,  one interesting fact of life that there is loan for everything except retirement . So prioritize your retirement corpus before all other goals.  
  1. Do friendship with equity investing . Always remember, its a capitalist world . The businesses will continue to command dominating positions and equity investing will help you in accumulate business ownerships. A word of caution. Equity investing is a serious business and needs committment of time, study, experience and discipline.  
  1. Work on creating passive income so that dependence on active salary income reduces to minimum in next 10 15 years. 

Having jotted down my thoughts on the event, I also wish to share a story from Mahabharata, where Abhimanyu, Arjun’s son entered the chakravyuh with his theoretical knowledge and got stuck and suffered defeat like wise personal finance too is like a chakravyuh wherein all Gyan is available online, so my sincere piece of advice shall be to seek professional advice from Certified Financial Planners and advisors to conquer life stage planning w.r.t Personal Finances. 

Rtn. Er. Bhanu Pratap Jain, CFPCM |CII (Award) UK| CFGP The author is a computer science engineer by qualification and a certified financial planner by profession. He helps professionals and businessmen with personal finances and help them retire early. His firm manages wealth for 700 families since last 50 years with assets under management and advisory of more than 200 Crores . He can be reached at ceo@financialarchitect.in

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