LoanRaja Blog- Personal Finance Guide

Satyam fiasco might have thrown fresh challenges for different segments of society. You can use them as tips to manage your uncertainty.

The current Satyam fiasco has a lesson for every individual. If you are an investor, now you know that you don’t have to go by the EPS and PE rations because they can turn meaningless; if you are an employee, the lessons you learn are a bit more challenging. You can’t take it for granted that you would be receiving salary every month, can’t expect your credit card limit to be unchanged because every card issuer can lower it overnight!

While it is still not officially out as to whether Satyam employees would be paid salary for the current month or not, it is a situation familiar for many employees in the last few months. chances are that many could land up in similar situation in the coming months if the current environment were to continue. Hence, if you are one of those who still have a cushy job with uninterrupted income flow, take time to plan for that emergency.

Here are some areas you need to focus on in the coming days:

Cash for sustenance: gone are the days where you could live with a zero balance in your account and wait for the salary to refurbish your bank account. In the days of pink slips, your bank account needs to look rosy and hence, keep cash to sustain yourself for at least a month. This in itself is not enough. You need to have liquidity which can sustain you for a minimum of six months or your investments should be accessible in the days of emergency. The options for liquidity could be from a number of investment products such as bank deposits, liquid funds or company deposits. Keeping money in savings account may look an easy option but other products let you earn a bit more income. For instance, a balance of Rs 1 lakh in an FD can get an interest income of around Rs 3,500 for six months whereas in an SB account, you may not even realise the additional income!

Keep your credit calls low: This is no time for splurging on shopping through borrowed funds and if you are one of those habitual card spenders with large outstanding on credit card, go slow on the same. A credit card loan is still expensive and paying an interest of 40-50% is an avoidable expenditure in the current environment. Hence, if you are in the habit of rolling over your credit card bills, make it your New Year resolution to discontinue the habit.

Take a medical insurance policy: Employers aren’t any more in generosity mood and instead, are looking for fresh avenues to cut costs. In the coming financial year, many perquisites and facilities are likely to get an axe and some employers have already indicated about discontinuing the medical facility. So, even if your employer provides medical cover, sign up for an insurance policy for your dependents as it can take care of any medical emergency. Since the premium paid on policy also provides tax benefit, the real cost of this insurance is much lower. More importantly, the policy can come in handy when you are in between jobs.

Also read: Satyam fiasco