Planning finances in the era of financial crisis - part 2

PLANNING FINANCES IN THE ERA OF EMPLOYMENT CRISIS -PART 2

 

Here we are again, to guide you to sail through your professional life.

 On one hand, while the uncertain demands for the skills have made virtually all jobs temporary, the modern consumer society has created a culture of spending beyond income levels, which adversely affects saving money. Good financial planning can act as a shock absorber in such situations. Most of us do have similar hopes and ambitions and most of them cost money.

 Financial planning –in the era of increasing job insecurity.

 With the increased instability of the tenures of job and decline of joint family and increased non – agrarian nuclear families, the scope to get support from families in hard times has reduced. This enhances the need for financial literacy and financial planning amongst the youth.

Financial planning is an on-going process. It’s important you take the time to design a financial plan that works for your current situation, as well as to review it from time to time to ensure it meets your needs and financial goals.

What to do in case of loss of job? Shocked?  -  We are living in an age of uncertainty.

With new schemes launched many companies such as “Company Temps” where contract labourers which deployed for six months at a stretch on the rolls of the company and then given a break of five months, earning a steady income with a single occupation becomes difficult. In the un-organized sector these things are all the more common. Daily wage labourers are seldom unsure about their first meal of the day.

The labourers in construction sector are the most affected by this as the employment is temporary, and the span of work is mostly short-lived. Apart from mere brick work, it affects painters, electricians. If you are one of them your life might get affected based on the project.

Hence, there is a need to look for multiple sources of incomes to maintain a consistent lifestyle.

Re-skilling – a way to manage finances

Getting equipped with multiple skills can help you enhance your scope to earn wage. Depending upon your choice of work, you may re-skill yourself in pisciculture, animal husbandry, horticulture, Poultry, carpentry, pottery, oil pressing, leather works, cottage industry, handicraft products, brick industry, making spices can act as seasonal sources of earning incomes. Further, enrolling in the employment guarantee scheme for rural citizens, which can provide a minimum 100 days of employment in a year can help you earn decent wage that are well defined in the scheme.

In case nothing works for you, you can avail the benefits of Government scheme to open your own micro-enterprise in the trades you are skilled. Let us discuss about the same.

 How to open your own micro enterprise?

Government and many social enterprises are extending interventions and support rural innovations for micro enterprises. Indian Government provides a collateral-free credit to the Micro and Small Enterprise sector, which can be availed under schemes such as the MUDRA Loans scheme. This scheme provides loans up to 10 lakh at yearly 12 per cent interest rate. Reach out to your nearest public sector bank to know more. Further, the scheme by SIDBI for soft loan can help you getting incentives such as flexibility of payment of monthly instalments.

Let us analyze it a bit more.

What care should you take as a self- employed individual?

You can start by listing down all your clients and the payments expected from them and then the projected expenses for each month. This will help you gauge your cash-flow picture better and help you save and spend diligently. 

 As a next step, you need to determine your average monthly income, as your monthly income may vary at times. If you have a month where you earn more than average, put the surplus into a savings fund to supplement less lucrative months.

While you may have the flexibility and autonomy by being self-employed, the fluctuating income can be difficult to deal with as monthly outgo may remain constant your income inflow may not. The onus to secure your financial future is completely on you. Hence, along with your surge to turn your commercial dreams into reality it is better to participate in schemes for the self-employed persons.

The Atal Pension Yojana is one such scheme where the minimum contribution of Rs. 1,000 per annum is required and maximum permitted contribution is Rs. 12,000 per annum. Further Government will contribute Rs. 1000 per annum. You can avail benefits such as withdrawing money at several occasions and also avail a pension when you reach the age of 60.

 Taking a look at your lifestyle and actually living within your means can make your financial planning successful.