The impact of the economic crisis facing the country has started trickling down to lay persons like us. I was speaking to my sister Samantha over the phone just a while ago which actually prompted me to post this blog. Samantha works in an IT company which has just announced its plans to lay off employees. Thankfully she does not feature in the firing line. But she was worried that any time soon, it could be her turn to be shown the door.

There are many reasons why companies lay off employees. When the economy was bullish orders were flowing in big and fast and companies needed people to execute the work. Now that there is a slowdown, orders start dwindling in size and number and in effect the requirement for the human resource also goes down. To add to the misery of the companies banks have started restricting loan disbursal to businesses or charge higher interest rates due to the liquidity crunch, throwing a spanner in the development plans of companies. These are just two of the many reasons why jobs are laid off.
It is important to be prepared for the worst in such times and let me suggest how:

1. Start creating an emergency fund
Traditional wisdom suggests that one has to save around 3 months of one’s salary as an emergency fund. If you have not done it so far, it is not too late to start doing it. Check all the possible ways in which you can save money. It is ok if you do not spend your weekends at the mall or hangout for a beer with friends for a few weeks, at least until you have saved up a decent sum for your emergency needs.
 

2. Get mentally prepared
As much as the financial preparation, it is important that you mentally prepare yourself for the worst. The emotions of people getting laid off range from anger, guilt, low self-esteem to a feeling of helplessness. Understand that when you are in a boat and the stream is rough you just have to sail along. No point finding faults with your boat or cursing your fate. Remember there are things beyond your control. Just keep telling yourself that it is just an opportunity for your to realise how tough you are as a person.

3. Start networking
Even as you are still in your job, rummage through your phone book, revive old contacts, make calls to people who matter, just to say hello. Let people remember that you are still around. You can subtly hint them that you are looking for a change in job. You can also start circulating your resume among friends and job sites.

4. Prioritize your debts and investments
Make a list of the debts and loans to be paid off and prioritize them. By paying your secured loans like mortgage and car loans regularly you can ensure that they are not seized for non-payment. Try not to default on your insurance premium payment either; else the whole purpose of having a policy will be lost. And avoid breaking your 401(k) or retirement plan as much as possible. Withdrawals from your retirement plans are subject to taxes and a 10% penalty as well.