It is a few months into the COVID-19 pandemic. Because of the lock down, economy is slowing down, many businesses could not sustain and eventually shut down. This leads to job lost. In the coming months, more job loss is expected. If you are employed, the following tips might be applicable for you if you feel insecure of your job:-
Tips #1: Reduce insecurity by having more clarity in your cash flow projection
People feel insecure because they are unsure how long their cash flow can sustain if they lose their job. Hence, to reduce the insecurity feeling, one must project the upcoming cash flow with 2 scenarios, i.e. job lose in near future and pay cut in near future.
Find out exactly how long your cash flow can sustain, when cash flow will turn negative with different scenario. Once you have the clarity, you can then find the solution.
Tips #2: Adjustment to your emergency fund
If you have done proper financial planning, you shall have at least 3 to 6 months emergency fund. It is now time to make sure your emergency fund is adequate for 8 to 12 months to cater for this bad economy situation. It is time to look at your standby assets, i.e. your investments (either stocks or unit trust) to find extra monies for emergency fund. Make adjustment to these investment assets, make sure they are liquid for withdrawal if required.
Tips #3: Cut down unnecessary expenses
After your cash flow projection, if the negative cash flow comes too fast, you need to look at the outflow. Identify 3 to 5 top expense items. Cut down big expenses, spend only on necessary items, avoid buying luxurious items at this time unless you have big positive cash flow. Postpone any big item purchase.
Tips #4: Re-look at the loan commitments
Loan commitments shall be one of the big expenses. Before things are turning bad, take the chance to refinance some of the loan commitments so that the upcoming financial burden is lessen. Once your job is lost, it is hard to refinance anymore. Start doing this now if your cash flow is not stable.
Tips #5: Restructure your insurance premium
If your cash flow is projected to be negative very soon, call you insurance agent to enquire about the cash value of your investment-linked policies. Check whether your policies can sustain without paying for few months or 1 year. It is important to make sure your insurance policies are kept enforce during this different period to protect your family for any unforeseen circumstances.
If you have saving plan, you can consider using the unwithdrawn guaranteed cash payments as your emergency fund.
Tips #6: Up your skills
During MCO period, there are a lot of e-courses available online. Check out which one relevant to your job and take up some courses to up your skills. When you are better skilled, the chance of being made redundant is lesser. Even you lost your job, with better skills, you can find a job easier.
Tips #7: Getting 2nd income stream
You are feeling insecure because you are dependent on single source of income. You shall start to find 2nd income stream via doing some freelance jobs utilizing the same skills that you have. The upcoming trend for companies is to engage freelance rather than permanent employees to lower down the fixed cost. You can also seek opportunities to sell items online. For example, if you like to make up, you can consider selling make up (something that you know a lot and like using). In short, you must first have clarity on your cash flow. When you know you have enough to sustain for upcoming few months, you will feel more secure. When you have clarity, you know what the next step is, either to cut cost or increase income. You are then able to act accordingly!
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