Gen Z and Finance: Navigating Layoffs in 2024 – A Financial Preparation Guide

Preparing for layoff! Sad…

While expectations are relatively calm overall, specific areas such as venture-backed startups and non-essential financial services might witness targeted layoffs.

Be prepared

For the Gen Z workforce, many of whom are in their first jobs and have not experienced layoffs before, being financially prepared becomes crucial.

Building an Emergency Fund

Gen Z individuals may not have the responsibilities of home loans or childrens education, but student loans & gadget-related debts could be prevalent. Establishing an emergency fund becomes a key strategy to weather unforeseen financial storms.

Fund Size and Allocation

Financial experts recommend building an emergency fund equivalent to six to twelve months of monthly expenses.

What’s the math behind it?

Divide your salary into one third for mandatory savings toward the emergency fund. Until 50% of the targeted corpus is achieved, long-term investments should be deferred. Allocate 50% of any incentives or bonuses to the emergency fund.

Where to Park Emergency Funds

While keeping two months of expenses in a savings bank account is advisable, the rest can be invested in conservative hybrid mutual funds.

Starting Investments

Once the emergency fund goal is met, it is recommended to divide one third of income into two parts. One portion continues to contribute to the emergency fund, while the remaining is earmarked for investments.

Smart Investment Choices

It is advisable for Gen Z to start mutual fund SIPs (Systematic Investment Plans) for their financial goals. While direct investments in stocks or trading are acceptable, mutual funds or index funds provide a structured approach.

Getting Insured

Acknowledging the uncertain times, getting insured is emphasised. Although employers typically provide health insurance, this coverage ceases after job loss. Securing term & health insurance becomes imperative for comprehensive financial protection.

Disclaimer

In a reality where layoffs persist, maintaining financial discipline emerges as a powerful strategy for Gen Z individuals. These ways are advisable but consult your advisor. Securers should consider all possible market risks while putting their money into a product.