Hiring freezes. Pay cuts. Layoffs. CA explains how salaried employees can make it a bit less stressful

The current economic climate is proving tough for those dependent on monthly paychecks. With companies across industries cutting down on hiring, imposing freezes, or even resorting to layoffs, job security has become increasingly fragile. Chartered accountant Nitin Kaushik recently highlighted these realities, urging working professionals to prepare themselves financially for unforeseen disruptions.

Growing Risk of Job Loss

According to Kaushik, the employment market no longer offers the stability it once did. Reductions in workforce, salary cuts, and halted recruitments have become common. This means that instead of asking if instability will occur, employees should start considering when it might happen. Such an environment makes financial preparedness not optional but essential.

Importance of an Emergency Fund

Kaushik emphasized that the most effective safeguard against sudden unemployment is an emergency reserve. He recommended building a cushion equal to at least twelve months of household expenditure. This time frame matters because, on average, professionals who lose senior-level positions may take six to nine months to secure a suitable opportunity, while economic slowdowns could prolong this period. With a full year’s expenses in hand, individuals can wait for the right offer instead of being forced into a poor career choice simply for survival.

Where to Park Savings

For practical allocation, Kaushik suggested splitting the emergency fund into two halves. One part should be kept in highly liquid instruments like savings accounts or liquid mutual funds for easy withdrawals. The other half should be invested in extremely safe short-term options such as fixed deposits or treasury bills to ensure security while still earning some returns.

Stability Through Preparation

While a regular salary provides a sense of consistency, it is an emergency fund that gives true financial breathing room. Kaushik urged professionals not to wait for an unexpected job loss before starting to save but to begin building their safety net today.