“Individuals should maintain at least six months of expenses, including EMIs, though a more conservative range could extend up to 2-3 years”
As layoffs become more frequent across sectors, financial preparedness is moving from a “good-to-have” to a necessity. Planners say the difference between stress and stability often comes down to liquidity, insurance cover, and disciplined investing. Venkateswaran Muthukrishnan, Partner, Marina Wealth, also an AMFI registered MF distributor, outlines practical steps — from building an emergency corpus to managing EMIs and investments — to help households navigate sudden income disruptions.
What is the ideal emergency corpus individuals should maintain today?
There is no one-size-fits-all number. The ideal corpus depends on factors such as risk appetite, age, job stability, and financial commitments. As a baseline, individuals should maintain at least six months of expenses, including EMIs, though a more conservative range could go up to 2–3 years.
In your experience, how many clients actually have this buffer in place?
More than 85 per cent of our clients have built such buffers, largely due to sustained financial planning and awareness. Younger or first-time investors are typically still in the process of creating this emergency corpus.
What are the first financial steps one should take within the first week of losing a job?
Start with a detailed review of expenses — identify essential and non-essential outflows and eliminate avoidable spends, especially auto-debits. Check whether employer-provided health insurance continues during the notice or garden leave period, and secure independent coverage, if needed. Submit any pending reimbursements and clear high-interest liabilities such as credit card dues.
Which expenses should be prioritised, and what should be cut first?
Households should first map all expenses and prioritise essentials such as housing, food, education, and healthcare. Discretionary spends — like multiple OTT subscriptions, unused memberships, or low-utility services — should be the first to go.
How should individuals approach ongoing EMIs after a sudden income disruption?
If supported by an emergency corpus, most EMIs can continue. Otherwise, liabilities should be categorised. “Good” EMIs, such as home or vehicle loans, should be maintained, while “bad” debt — like credit card dues or personal loans — should be prioritised for repayment.
Would you recommend restructuring loans, using savings, or liquidating investments? In what order?
Investments should typically be evaluated first, followed by savings. We will have to critically evaluate the current investments and bucket them into core and non-core investments. Over a period of time, people accumulate investments in life insurance policies, real estate, etc. It would be a good opportunity to re-evaluate the need for each of them and, after discussing with your financial consultant or advisor, exit or utilise them to pay off or restructure the loans.
What happens to health insurance after job-loss?
In most cases, employer-provided health insurance ceases once employment ends. But in few cases, the group insurance cover can be converted into a stand-alone health insurance policy by retaining the vintage of the group cover, particularly with PSU insurance companies. However, coverage for older dependents may face stricter scrutiny during such transitions.
How critical is it to maintain personal health and term insurance during this phase?
Adequate life and health insurance provides financial protection at a time when income visibility is uncertain.
Should individuals pause SIPs or redeem investments during a layoff?
This is case-specific, but the general thumb rule is to stop the SIPs to conserve cash. Redemption decisions should depend on liquidity needs, the nature of investments, and available buffers.
What is the recommended order of liquidation across asset classes?
Typically, liquid instruments such as fixed deposits and mutual funds are redeemed first. Low-yield insurance products can also be exited to reduce both liabilities and future premium obligations. Real estate should be critically evaluated, especially if it was acquired without clear financial utility.
Is it advisable to dip into long-term retirement savings such as EPF or NPS?
This should generally be avoided, as it disrupts long-term compounding. However, in extreme situations, it may be necessary. The trade-off is a potential compromise on retirement goals for short-term liquidity.
What are the most common financial mistakes people make after losing a job?
Becoming overly risk-averse and shifting entirely to low-return assets, chasing high-yield but risky investments, lending money to friends/family despite uncertain liquidity, and making discretionary big-ticket purchases. Another frequent error is prepaying long-term loans prematurely, which reduces liquidity. Many also avoid discussing their situation with advisors or family, which can worsen decision-making.
How should preparedness differ across household types — single earners vs dual-income households, or individuals with dependents?
Dual-income households typically have greater flexibility, as the likelihood of both earners losing jobs simultaneously is low. Single-income families, especially those with dependents, should maintain a larger emergency corpus.
Are you seeing an increase in clients seeking advice on layoff preparedness? Has resilience improved?
Yes, many of our clients want to know their preparedness, if they have to face such a situation. We discuss their needs covering various components such as living expenses, children’s education or marriage and other commitments, if any, and indicate an amount which they would need for financial security. When they see that their portfolio has adequate buffer for meeting these type of situations, they heave a sigh of relief and thank us for considering it.
How can someone be ‘layoff-ready’ in the next six months if they wanted to?
Start by creating a budget that clearly separates essential and discretionary expenses to determine your minimum monthly outgo. Build an emergency fund covering 6–12 months of expenses, including EMIs, parked in FDs or liquid funds. Ensure adequate life cover — at least 10x your annual income — through a term policy, with full disclosure of any pre-existing conditions. Complement this with a standalone health cover of at least ₹10 lakh, and, if risk-averse, add a super top-up of around ₹50 lakh for extra protection.
Prioritise repaying high-interest debt, especially credit card dues. Avoid large discretionary commitments. Keep a line of credit available but only as a last resort. Review your portfolio by separating core and non-core assets, and identify those that can be easily liquidated. Finally, understand your severance and other entitlements in case of a layoff, and use this knowledge to negotiate a better payout where possible.
VENKATESWARAN MUTHUKRISHNAN
Partner, Marina Wealth
