With economic markets hit hard, companies are either laying off employees or cutting down salaries to keep themselves going. These layoffs and cutbacks have severely affected the middle and lower income population as loss of income affects them from all sides.
Salary cutbacks is the first step that a company takes in order to keep itself afloat. They choose to pay the employees a bare minimum amount for a certain number of months; this can be a ratio of 40/60 or 80/20 depending on what fits your and their needs.
Though it is the easiest way for the companies to keep themselves alive, it can have a drastic impact on the earning professionals in those companies. Salaried professionals have a monthly financial bucket list to cover up with their salaries.
Salary cutbacks can mean;
- They have to struggle to pay their EMI’s on time.
- A few who have loan pay-offs be it personal/home/educational loan, it becomes an extra burden to take care of.
- The salary cutback has a direct impact on their individual as well as a family lifestyle.
- Many earning parents might even have to cut on the kid’s expensive activity classes.
- More than 50% of the population might struggle with the monthly rent they have to pay, along with their daily essentials.
This salary cutback can breed in people a sense of hopelessness, worthlessness, not being good enough or not being able to do enough for his family. This can in turn cause self-esteem issues, depression, frustration and lead to severe depression.
- Try to gauge the cutbacks and make your monthly plans accordingly: Check how much money you’d be liable for and make a budget plan that focusses exclusively on the essentials. This way you eliminate the non-essential expenses for the moment. Though this might mean a considerable fall in the lifestyle choices - it is vital for you and your family to understand that it is the need of the hour.
- Pause all the investments: Many salaried professionals are used to investing a little amount every month either in smaller shares, mutual funds or assets like gold even. In the pandemic situation salary cutbacks might require you to pause all the investments, temporarily, in order to make the ends meet with the available salary.
- Use Moratoriums for pending loans: The RBI has permitted banks to let the borrowers/ loaners be given a 3-month moratorium on the payment of loan instalments. If things are difficult, do not hesitate to avail the moratorium facility.
- Rent out: A few might have a vacant room or space in the house. In the times of need, one can think of renting out the spaces to make do with the unforeseen financial crisis due to pandemic.
Pandemic has taken a toll on every individual’s life; financially, emotionally and physically even. With the financial burden, many working professionals might experience feelings of distress, depression, disappointment, frustration, anxiety, sadness and the likes. In such times it is important to make a clear plan for short-term goals to survive the crisis.