We are living in a VUCA(Volatile, Uncertain, Complex & Ambiguous) world.  So I think we need to be prepared for a job loss at any stage in our life. We can make this period less stressful if we know how to navigate it.  The most important aspect of loss of job is financial planning, however it is not one size fits all, every age group has their challenges and needs to be addressed differently.

In your 20s

You are still in the beginning phase of your career journey, consider a job loss at this stage just a bump, ride over it with confidence. I can’t emphasise enough on investments, invest as much as possible right from your first salary. Your responsibilities are low, so are your expenses, don’t let the money sit idle in your bank account, let it work for you. Having said that, during the period of no job, you need to be prudent with your finances. Financially you should focus on –

  • Expenses – Keep your non-essential expenses to the minimal.
  • Debt – Credit card payments, personal loans, Buy Now pay later, – if you have any of these going on, then prioritise it. Do not miss out on the payments. This will severely impact your CIBIL score and jeopardise your future loan prospects(Loans that you may need for home, education etc. )
  • Investments – Any SIPs running can be put on Pause till you get a job.

30s – 40s

This is the period when the responsibilities and liabilities are picking up, so a job loss at this point would not only impact your existing cashflow situation but also your future financial goals. At the same time, at this age, getting another job is potentially easier, so don’t be disheartened, just focus on job applications. Financially, the focus areas should be –

  • Emergency Fund – This is the time when your emergency fund gets activated, if you have been diligently keeping aside some money for the rainy day, well, here is when it will be most required.
  • Debt – Ensure that debt, if any, should be prioritized, EMIs should be paid off time. If not, this will severely affect your CIBIL score.
  • Health Insurance – Another critical missing piece which can hurt you financially is health insurance. If you have been depending solely on the health insurance given by your companies then a period like exposes your vulnerability. So having personal health insurance guards you against any such exigencies.
  • Investments – If you have SIPS running, you may want to put it on Pause till the time you get back on track. Don’t forget to re initiate it once your back to the labour force.

In your 50s

This is effectively the last leg of your career run. I believe that the new unofficial retirement age is 55. If you are able to hold on to your job till 60, especially in the private corporate sector, then your incredibly lucky. Considering that India has a long tail of talent pool in the age group of 40s, it might be a difficult to get back on the corporate ladder. Having said that, this is when your networking skills will be put to test. Financially, hopefully, you are done with your debt and other major expenses like children’s education, home etc. Also you would have an investment corpus that would need to be reviewed. Financially your focus areas should be –

  • Health Insurance – You need to have a personal health insurance from here on, because the career journey in your 50s is going to be bumpy, so best to be self-reliant. Ensure that you are covered all the major critical illnesses as well.
  • Financial assets – From this point onwards Cash is King. This is the time to transition your portfolio from physical investment assets to financial assets. Keeping illiquid assets which offer lower return does not make sense. Ensure that 80% of investment should be financial assets.
  • Investments – Once you liquidate your physical assets, A proper asset allocation based on your risk tolerance should see you through the rest of your journey. Setting up a SWP(Systematic Withdrawal Plan) that comes in every month as income will

All said and done, job loss is a vulnerable phase, go easy on yourself. Use the period to upgrade your skills, network, read, exercise and stay positive. Most importantly stay the course.