It’s been almost three weeks and counting since the lights went out at Petrotrin. Surreal as it must still be for the many workers who are now on the breadline, some having even shared with Guardian Media back in October that their severance packages weren’t all that attractive either, they must find a way to live beyond Petrotrin.
This is the third in a three-part series in which the Sunday Guardian offered insightful tips from experts on how retrenched workers could make their ‘take home’ money work for them.
This week we speak with and share some tips by First Citizens’ GM, Sana Ragbir.
Document all current household expenses
For families to stay afloat in the face of retrenchment, Ragbir said they should begin with ensuring that all current household expenses on a monthly basis are clearly documented.
“Be sure to differentiate ‘discretionary expenses’. In other words, what are the expenses that can be cut and are not needed? Look for alternative suppliers/products that are cheaper alternatives—such as switching from foreign goods to local goods etc,” she said.
Ragbir said with the money received from a retrenchment, the family should at least ensure that there are three to six months of monthly expenses put aside. This monthly expense figure, she said, should be determined after making all the required adjustments and cutbacks.
Assess existing loans and mortgages
It might be a good time to renegotiate payment plans on loans and mortgages, Ragbir said. She recommended reaching out to your respective financial institution to discuss the options of renegotiating.
She said at Christmas there are loan campaigns offered at various financial institutions where there are attractive options. Switching banks if necessary, where better financing rates on existing loans/mortgages exist, should also be considered.
“While there will be fees associated with switching and renegotiating loans, it is important to compare the reduced interest rate on a monthly basis versus the existing interest rate and the savings that will result there. Don’t just focus on the one-time costs associated with the switch or renegotiation,” Ragbir said.
Take ‘careful’ risk
After you have put aside your monthly expenses, don’t be apprehensive to invest the balance of funds, Ragbir advised.
She reiterated that younger people should use this opportunity to invest their money. “Being young affords the opportunity that many of these persons will be re-employed in a short time, especially those that are highly qualified. Therefore, look for medium-term slightly moderate risk investments such as international bonds and equities, growth and income funds,” she advised.
Ragbir said people should look at different investment options. “It is important that any financial adviser assesses your current situation and performs a risk profile assessment so that any recommendations made are suitable and appropriate. Use these excess funds that you have come upon to invest for the longer-term future and plan for you and your children’s education, buying a house, retirement etc. These funds can be placed in investments that do not need to be redeemed right away for easy withdrawal.”
For the older employees who may be close to retirement, one would expect that the risk profile is slightly more conservative. As a result, she recommended that this group of people sit with their financial adviser to explore more conservative, less risky investments to save those excess funds.
“These investments should also offer opportunities for quick and easy redemption of funds so that they can be accessed easily.”
In the same breath, however, Ragbir said, there may be some older employees, who are very qualified and have a lot of business experience. These people she noted, should look for “entrepreneurial type” activities.
“There are many young companies emerging in T&T now who need seed capital financing and advice and expertise from appropriate mentors. Explore the various business chambers to seek out a list of emerging businesses and ideas. See where you can find a business idea that will benefit from your experience and look for ways to invest in the company. Financial advisers will also be able to advise on appropriate ways to make these investments once you find an idea or business worth pursuing.”