Nowadays, everyone is talking about how big organisations are laying off their employees, many due to cost cutting. In this article we are going to explain how you could make yourselves financially stable during the eventuality due to either job loss, inability to work temporarily, or another massive pandemic.
However, you cannot avoid the worst case scenarios where you have been laid off by the company within a few days of your joining. But, you have plenty of time to consider your long term financial planning to make your family stable. Here is what you can do.
If you are a fan of doing following thing, “retire as early as possible” concept is for you:
- You have an idea to start your own business
- You want travel the world
- You want to pursue your passion as early as possible, which is not considerable while doing your main job.
Set a financial goal to retire soon, and you can turn the eventuality of job loss into an opportunity if it happens around your targeted age of retirement.
Protect through insurance
Your financial protection is necessary in order to be preserved during your bad times. Two types of insurance might help you out, first one is life insurance. If you are the earning member of your family, your family is directly related to your family’s financial security. They need to get enough corpus of money in your absence to keep their daily expenses smooth and uninterrupted.
Second one is health insurance for you and your family members. Imagine you don’t have money, you are already surviving on your savings. Amid such a situation, one of the family members gets critically ill and you need to hospitalise your loved one.
In such a situation, lack of funds might become a roadblock in giving the best treatment to the same. Health insurance might enter as a survivor for you. By claiming health insurance, you will be able to give the best medical facilities to your loved one. Try to avoid insurance claims that are on reimbursement basis.
There are two kinds of income, first is passive and second is active. Active income is the one for which you work actively by putting your majority hours of the day in it, which could be your job, profession, or business.
On the other hand, when money works for you without consistent efforts, an income is known as passive income, for example, rent, dividend, and interest income. Passive income helps you in stabilising your finances when your active income is not treating you well. Keep in mind that you need to pay in your passive income as well, so plan your tax accordingly.
You do not need much to deal with your eventualities if you are prepared for it. Personal financial planning is a tool through which you can stabilise your finances during job loss. Retirement planning, investments, passive incomes, and insurances must be the part of regular life. It should not be done only due to eventualities, but also to create wealth for future generations.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com