Tata Consultancy Services left people stunned at the end of July after announcing plans to lay off more than 12,000 employees. The move has left many IT sector workers unnerved and sparked growing concerns about similar cuts in other companies. A growing call for AI and automation has incidentally led to the loss of more than 100,000 tech jobs across the world over the past few months.
With the threat of layoffs looming large over Indian workers, many have now begun looking for ways to ensure their financial stability. It has also become increasingly important to invest and diversify your financial avenues, as well as save money for a rainy day.
ALSO READ‘You land in the danger zone’: TCS employees fear layoffs may likely exceed 12,000 under new bench rules Here are six financial pitfalls to keep in mind: 1. Emergency funds
It is extremely important to have an emergency fund set aside for rainy days — for unexpected bills, medical expenses or even a sudden loss of employment. Experts suggest that the amount should be equivalent to at least three to six months of essential expenses. The money should be saved in a liquid account so that it can be accessed at any time.
2. Paying off credit cards
While credit cards can make major purchases easy on the wallet, they often come with higher interest rates. Rolling over credit card debt and paying only the minimum due can lock people into high-interest debt traps. Customers often own multiple credit cards from different banks and pay only minimum monthly payments on outstanding balances. This can leave the card holder severely overextended and unable to repay the dues in full.
ALSO READ‘Don’t wait for a trigger’: Amid TCS layoffs, Indian IT engineer shares key lesson on up-skilling 3. Heavy reliance on EMIs
A high EMI burden can become extremely cumbersome during a financial crisis. Experts stress the need for debt restructuring in case a majority of your salary amount is going towards repayment of various loans or credit card bills. Using most of your salary for EMIs also leaves very limited funds for essential expenses and savings — increasing the risk of defaults and damaging your credit score. Debt restucturing can be a key way to handle such as situation in case of layoffs.
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