What to do if you lose your job

Take these steps to ensure you dont have to deal with a financial crisis Amit Shanbaug

In 2004, Agra-based Shabd Mishra was working with a leading research company as its head of sales, earning a package of 7 lakh annually. As a newly wed, he was looking forward to a bright future, when he was sacked because of structural changes in the company. I was left with almost no money as I had deployed most of my savings for my wedding just a month previously. I tried to get another job, but most companies offered a lower salary or position, which was humiliating , says 36-year-old Mishra. Thankfully, he could depend on his wife, a coporate lawyer, to keep the home fires burning. However, everybody may not be as lucky him. How can you tell if you are likely to lose your job in the near future, and what can you do to safeguard yourself against such an eventuality ? We spoke to a bunch of experts to help you with these dilemmas. Read the writing on the wall Financial experts explain that in most cases a pink slip doesnt come out of the blue. Sometimes, job loss results from employee incompetence and negligence

, and at others, it is because of inevitable, external circumstances, such as cost-cutting measures or a change in the company management. In either case, as Darryl Cabral, partner at Total Solutions, a Mumbai-based human resource consultancy firm, explains, there are sure to be certain tell-tale signs indicating an imminent job loss. Not getting a salary increment or a promotion is a clear indication that the management is unhappy with the performance of the employee. So, chances are that he could be asked to leave within a short period of time, says Cabral. A similar strategy deployed by a company is to look through the employee, making him feel invisible. Instances like a junior being promoted to do an employees job or the latter being asked to train a junior for his own role are red flags. What to do in such a situation? Human resource experts are of the opinion that a person should try and take control of the situation rather than lose his cool when threatened with a possible job loss in the

near future. If the management has not yet told you to put in your papers, you should not do it. It is possible that only your immediate senior has problems with you, which may not matter much in terms of your overall growth prospects in the company. By quitting hastily, you would only make things easier for the disgruntled senior, not yourself. How to cope with a pink slip In the worst-case scenario, if a pink slip appears imminent, the best option for the employee is to search for a better job before quitting the present one. An employees bargaining power increases if he has a job in hand, says Cabral. Simultaneously, you need to get your finances in order. As a first step, you should start prioritising your expenses using financial planning tools. After this, assess your monthly expenses and create a contingency fund, which will take care of your day-today expenses for at least six months. Though a six-month period is recommended for the contingency fund, it can be extended to around nine months if the employee falls in a high-risk job category, says Mukund Seshadri, founder-partner, MS Ventures Financial Planners.If you have an outstanding debt, be it loans or credit card dues, you will have to rejig your expenses to make sure that you continue to meet the repayment schedule. Remember that defaulting on your debt is not an option, no matter how dire your situation. According to Pai, the worst thing to do in the face of a pink slip is to start disposing of ones assets in real estate or equities in panic. This is a common mistake made by unemployed people, he explains adding that, Selling your investment in a hurry wont solve your problem. How to get a new job According to Cabral, employees who get pink slips can approach their previous companys competitors for a job. The aspirant could also tap his network in the industry to circulate his resume. Another thing to remember while looking for a fresh job is to focus on a company that is smaller than the one you were employed with. A company that is smaller in scale than your ex-employer would be happy to take you at a better position. This is because you will bring in a wealth of experience, particularly relevant to a larger set-up, adds Cabral. At the same time, never short-sell yourself and settle for a lower salary or position in a bigger company. You wont be happy with the drop in pay package and will constantly think of shifting to a bigger place. This is sure to impact your productivity, says Cabral.

5 tips for building an emergency fund

A contingency corpus is your defence against unforeseen circumstances. Here are the points to keep in mind while setting up one for yourself 1 Do you really need an emergency fund? The importance of setting up such a fund cannot be exaggerated. Everybody should have one, though some dont need to put away the requisite amount if they have enough assets. It is often argued that you dont need emergency cash if you have a credit card. A credit card does come in handy when you face a financial crisis, but the cushion that plastic money provides lasts only 15-30 days, till the bill arrives 2 How big should the corpus be? Your emergency fund should be large enough to take care of your living and other essential expenses, such as house rent, school fees, health care and insurance, for 3-4 months. A corpus smaller than this defeats the purpose of setting it up. On the other hand, dont allocate too much money to it either. Some financial planners err on the side of caution and recommend putting away 8-9 months expenses for contingencies. However, this can lead to a lost opportunity because you are locking away a large sum in low-yield avenues. 3 Where should you invest the money? There was a time when gold was seen as the safest investment for tiding over bad times, but parking emergency funds in it is no longer a prudent decision. Gold gave negative returns last year and 2014 may not be any different. While paper gold is trading at a premium, physical gold will incur high making charges. Instead, the emergency fund should be stashed in a liquid option, such as a sweep-in bank account or an ultra short-term debt fund. The money in a sweep-in account is immediately available, while the redemption proceeds of debt funds reach you bank account within one working day. 4 Should you consider equitybased options? Investors are unlikely to find the 6-7% offered by sweep-in bank accounts and short-term debt funds too attractive. After all, the stock markets are upbeat and analysts believe a bull run is around the corner. Why not invest the emer gency fund in a good equity-based option for better returns? Recall the situation in 2008, when stock prices fell off the cliff and jobs disappeared almost at the same time. Imagine having to redeem your investments to tide over an emergency when the stock markets are in the red. 5How to save for the contingency fund? Dont try to build the corpus too quickly. It will be a burden on your cash flow and derail other plans, such as saving for retirement or childs education. If you havent already established an

emergency fund, start putting away 10-15% of your monthly income for this purpose. This will help you build a corpus in about two years. Any windfall gain, such as a tax refund or an annual bonus, should also be diverted to it. However, it is important that this amount be treated as sacrosanct. Under no circumstances should you dip into it for discretionary expenses.

From April, RBI will withdraw all pre-2005 notes

TIMES NEWS NETWORK Mumbai: The Reserve Bank of India (RBI) has said all currency notes issued before 2005 will be withdrawn from circulation a move that is expected to check fakes and at the same time cause consternation among those dealing in cash. Though the central bank has desisted from declassifying these notes as legal tender, there is fear that a logical conclusion would be to take these notes completely out of circulation. In terms of the timeline set out by the central bank, from April 2014 all banks will accept and exchange pre-2005 notes. These can easily be identified by theabsence of the year of printing on the note. Sources said that the maximum number of fake currencies have been in the pre-2005 series. From July 2014, to exchange more than 10 pieces of Rs 500 and Rs 1000 notes, non-customers will have to furnish ID and address proof to the bank branch. DONT PANIC Banks to accept all pre-2005 currency notes for exchange from April After July, noncustomers must furnish identity and residence proof to exchange more than 10 notes Aimed at checking fake notes in circulation Step may have implication on black money, say bankers RBI step may impact black money, say bankers Mumbai: The RBI will withdraw from circulation all currency notes issued before 2005 to check fakes. The central bank has been gradually withdrawing older currencies with less security features from circulation by destroying these notes which are sent by banks. However, the fact that it has chosen to issue a press release with a timeline and a statement that the exchange facility will continue until further communication is seen as a signal of an imminent deadline. At the same time, it has made an appeal to the public not to panic but to actively cooperate in the withdrawal process. The total value of currency in circulation in end-March 2013 was around Rs 11,648 crore which is more than three times the Rs ,61,227 crore of currency in March 2005. RBI sources said that while the central bank keeps track of the value of the currency in circulation, it was not possible to identify how many of these were printed prior to 2005. Every year, RBI destroys and reissues millions of notes with the lower denominations having the shortest life due to their high velocity. But even today, there continue to be in circulation, notes bearing signature of former governors who stepped

down in the 90s S Venkitaraman upto December 92), C Rangarajan (January 97), Bimal Jalan (September 2003). Bankers say that the process could have implication on unaccounted currency in circulation. Athough all banks have been asked to freely exchange currencies, bankers say that RBI norms require that every transaction over Rs 10 lakh be reported to the authorities as a part of global anti-money laundering norms. In the past, Baba Ramdev had called for withdrawal of currency notes of Rs 500 and Rs 1000 denominations to curb black money. But bankers said that the move is impractical and would require ATMs to be refilled thrice a day.