How can women maintain their financial health during prolonged unemployment

“I lost my job a few months after the first nationwide lockdown was declared to curb the spread of COVID-19 infections in early 2020. Hundreds of job applications and countless interviews later, I found a job in February 2021 only to be told a month later by my prospective employers that they were no longer recruiting new candidates because by then the second wave of the pandemic had already reared its ugly head,” laments 34-year-old Rashida Siddiqui based in Delhi who was previously employed as a business analyst at a startup.

Siddiqui’s tale is eerily similar to millions of women across India who faced the brunt of the economic upheaval brought about by the pandemic in the form of cruel job losses. A report published by the Center for Sustainable Employment at Azim Premji University in India showed that during the first lockdown in 2020, only 7 percent of men lost their jobs, compared to 47 per cent of women who lost their jobs and did not return to work by the end of the year. In the informal sector, women fared even worse – between March and April 2021, rural Indian women in informal jobs accounted for 80 per cent of job losses. Data by the Centre for Monitoring Indian Economy showed that female labour force participation plummeted to 9.4% for the period between September and December 2021 – the lowest female labour force participation rate since 2016, when the data was first compiled.

Even though the economy has roared back to life after the derailment brought about by the pandemic, India’s employment landscape continues to bear a battered appearance. Another report recently published by the Centre for Monitoring Indian Economy Pvt, a private research firm in Mumbai, revealed that more than half of the 900 million Indians of legal working age are no longer even looking for work. Unsurprisingly, the majority of these Indians are women – about 21 million disappeared from the workforce, leaving only 9 percent of the eligible population employed or looking for positions.

For women, the loss of income and livelihoods has deep trickle-down effects on the quality of their lives. Monetary independence grants women the freedom of choice – the choice to live life on their own terms, the choice to exit abusive households and families, the choice to access healthcare facilities and the ability to provide for their dependents such as aging parents and young children. “It has been two years since I have been unemployed. Having a regular pay cheque afforded me small luxuries and more importantly I had more leverage in terms of looking after my parents. Thankfully I had been saving and investing diligently before the pandemic hit and that has largely kept me afloat. I have managed to find a few freelance gigs that pay me decently but maintaining my reservoir of savings and investments is proving to be hard on a meager income,” narrates Siddiqui.

Derailment of financial goals can become an added cause of concern during prolonged periods of unemployment. While it may be difficult to continue investing in a manner you may have been used to prior to losing your job, it is imperative to maintain continuity with every little bit of money you can save. Siddiqui says, “My husband, thankfully, earns enough – as a family we have not had to cut corners after I lost my job. However, personally, my situation is far from comfortable. Even though he has been giving me money whenever I have needed it, its not the same as having your own income. I have been diligently investing whatever little money I am able to save after all my expenses because I don’t want my financial goals to be thrown off gear completely till I find a new job. Mutual fund investments have emerged as a savior because I don’t need to wait for a lumpsum to be accumulated to invest. Despite the turmoil I have faced in the last two years, I have invested every month in mutual funds through SIPs.”

Preeti Zende, founder of Apna Dhan Financial Services says strict adherence to a budget is sacred for ensuring your financial health doesn’t hit rock bottom during protracted periods of income disruption. “If you contribute towards your monthly household expenses then it is better to make sure that you are following the budget and religiously sticking with essential spending each month. Make sure that you are not using your emergency fund for any discretionary expenses. You have to postpone such spending till you regain employment,” she says.

Zende also advises that caution should be exercised before liquidating your emergency fund or any of your existing investments. “If your emergency fund seems insufficient then you may liquidate investments that you were doing for any urgent short-term financial needs. But never liquidate the investments for any ad hoc or impulsive purchases. Besides this, make a list of your compulsory expenses for the next six months including medical expenses. Check whether your total savings which is liquid and has not been deployed for your long-term goals, would be enough to cover those. If you feel that the liquid amount would not suffice, then pause your SIPs and other investments for a while. But if you have a solid reservoir of savings – more than what you have in the emergency fund – in that case you should continue funding your SIPs, especially the long term ones,” Zende says.

Key takeaways

– A review of your existing portfolio with the help of your financial advisor can help weed out any investments that may not be working for you and that can be channelized into asset classes that may be better suited to your situation and goals.

– Any decision to avail loans should be taken with thorough consideration. In the event of your job hunt becoming prolonged by a few months, a debt burden can be severely detrimental to your financial health in the medium to long term.

– Derailment of financial goals can become an added cause of concern during prolonged periods of unemployment. While it may be difficult to continue investing in a manner you may have been used to prior to losing your job, it is imperative to maintain continuity with every little bit of money you can save.

– Make a list of your compulsory expenses for the next six months including medical expenses. Check whether your total savings which is liquid and has not been deployed for your long-term goals, would be enough to cover those.

– If you have a solid reservoir of savings – more than what you have in the emergency fund – in that case you can fund SIPs, especially the long term ones.

This article is part of the HT Friday Finance series published in association with Aditya Birla Sun Life Mutual Fund.