On our daily Wisdom Nuggets For Today, we have been discussing ”Reasons why people go Bankrupt”. We also found that more individuals declare for bankruptcy than businesses as nearly 97% of bankruptcy filings are done by individuals. Today, we will look at Job Loss or Business Failure as another reason why people go bankrupt.
Yesterday, Hewlett-Packard Co. (HP) outlined plans ranging between 25,000 -30,0000 job cuts. Last week, a popular Nigerian Bank laid off a large number of their workforce, how does one deal with this? One day you have a job and the next day you don’t? Even if there’s a substantial severance package given, I’ve found that job loss and lack of financial revenue can quickly deplete your savings, investments and assets.
The thing about job loss or lack of business revenue is that even though your income has stopped, you don’t stop making expenses daily. The other thing about this is that you don’t know when the situation will change.
So how do you cope in times such as these? You may say to yourself right now “this can never be me” but as the old adage says, a stitch in time save nine – prevention, is better than cure.
Now that you are working, you have to begin to set-up an EMERGENCY FUND – This emergency fund will ensure that you don’t touch your savings, investment or assets during your financial down times. How much is ideal for this fund? some people say money that can last you for up to 6 months but I recommend that you work towards being able to build an emergency fund that can enable you meet your needs for at least 1-2 years without earning.
Create separate actual needs expense profile for such a time and plan around spending only what is budgeted for and what has been determined as a clear “need” not “‘want’ during this period.
DESPERATE TIMES REQUIRE DESPERATE MEASURES:
Set goals for when you must get another job or when you must start generating revenue in that business and work towards achieving your goals. Once you start getting revenue, first pay back into your depleted Emergency Fund and start building it up again.
He who fails to plan, plans to fail.
The Catalyst, Lanre Olusola
#MindOfTheRich #LearnFromTheBankrupt #WisdomNuggetForToday