Risk – that’s something that is prevalent in anyone’s life. Whether you work in the bottom most part of the pyramid or the top most part of the pyramid (it’s not too long back that a Mistry was told Tata).
But, more importantly, in the current blooming era of “START-UPS”, the element of RISK is larger. Yes, a startup life is exciting, challenging, it’s a different path that you have taken and are trying to chart out something new. However, along with the fun stuff, comes health issues that may come up due to additional stress, managing lot of things and also a huge question on the future.
Health related concerns definitely need to be addressed. However, while precaution could be one way to better your health, it is highly advisable to take adequate amount of health insurance, so that you are prepared for any medical emergency that may crop up.
While your company may be covering you up for medical insurance, ensure that you have covered your entire family and yourself for any medical emergency that may arise. It is advisable to take additional coverage to protect your financial health along with ensuring that pre-existing diseases continue to get covered in case you do not work in the start-up or business any more.
Beyond this, the next steps are to ensure that you take care of your financial side of life in an adequate manner too (as working in start-ups can make you suffer from financial stress aka late payments, no payments, shut downs, lay offs etc)
MAINTAIN AN EMERGENCY FUND
Life is unpredictable. Maintain an emergency fund. Slow and steadily – start to maintain a fund which is out of bounds for anything except an emergency. Have about 6 to 9 months of your expenses saved up. The savings could be in just a savings bank account or even a short term liquid/ debt mutual fund.
However – please do not misuse the emergency fund to buy the brand new phone that was launched in the market or such extravagant indulgences.
LIMIT YOUR CREDIT CARD USAGE
While credit cards are enticing people to spend more and more by doling out offers, please be aware that over-spending beyond capacity to pay can lead to financial imbalance. Also, converting into EMIs, paying later, leads to large amounts of interest (going upto 40% p.a.), which becomes a burden to you again.
Ensure that your credit card bill does not exceed 30% of your take-home amount every month. This is a key rule to follow whether you work in a start-up or elsewhere or do your own business too.
SAY NO TO DEBT (LOANS) BEFORE YOU ARE STABLE
Do not plunge into taking loans/ debt until and unless it is absolutely necessary. Start-ups may have offered you great salary packages, great incentives, stock, etc. However, the same needs to be stable. Remember the old saying – “Higher the reward, higher the risk (interchanged the words to draw context here)”. Your salary is a variable component when it comes to start-ups and depends largely on how your start-up ends up performing.
Give at least 9-12 months before making a major commitment such as buying property. Keep a buffer of savings to pay off the EMIs in case of any adverse event.