During the pandemic time, many people lost their jobs and some people also had a reduction in the regular salary they get. This has been the case for the last two years and companies even closed their business by sending all their employees home. Not because of the pandemic situation but this can happen anytime for anyone.
I'm going to be discussing some precautionary measures or things that we can do to manage our financial situation if there is a sudden job loss. Some of these things are something that I have been practicing and some are what I heard from my friends.
Keeping a backup fund that can run us for months
This is the first-ever thing that we have to do. This is also a type of saving but not for the future but this can help when there is an urgent need. We cannot guarantee that we will be in the income stream forever. So, now when we are having a good income stream, it is ideal to start doing some savings now itself.
We have to start accumulating a sum of amount that will keep us running for months with the same sophistication until we find a new job. Most of the people can run the show every month with 50 - 75% of their salary. Keeping that in mind, we can start these savings. We have to have this calculation in mind as to how many months we will be able to survive without the job and from this savings.
I used to have this conversation with the manager who is also a good friend to me. He used to say that he has saved enough money in a particular fund that will help him continue for nearly a year without any job in hand. After that conversation, I also wanted to create similar savings that can be used when I suddenly lose my job.
Creating other passive income sources
Passive income is any income that we can get by not doing any work as such. For example, if we have invested in something and when the value of investment appreciates, we get a benefit from that. That's also some kind of passive income. Rents from properties are also a good source of passive income.
We can be very safe about leaving a job or losing a job if more than 50 percent of our income is coming from passive income. In order to get a passive income, we might need an initial investment of money or our time. We have to make sure that the passive income streams that we create should be something that shouldn't be affected by any means. Frequent review of our passive income stream and making changes to them can also be an ideal approach.
Having a secondary job for safety
This is the next thing that we can start working on. It is quite uncommon to have a secondary job in hand, especially we are from India. But we can plan to convert one of our interests or hobbies to a secondary job that can give us a good source of income.
I have heard that a few people who are IT employees also spend their weekends as auto drivers or cab drivers. This is a good income stream that we can rely upon during our wee time which can either be weekends or on public holidays.
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