Four money tips for the class of 2020 amid poor job prospects
New graduates should focus on dealing with education loans, if any, and temper their expectationsAsk your parents for financial help or talk to your bank and renegotiate the terms of your education loan
PremiumFor Gurugram-based Sheetal Bhardwaj, 25, who graduated with an MBA in human resources in March, finding a suitable job amid the covid-19 outbreak has been challenging. “I had reached the final round of interviews for some companies but the offers are currently on hold due to the pandemic. Other companies have implemented a hiring freeze," said Bhardwaj, who graduated from IMT Hyderabad. Dealing with a situation like this, especially at the start of one’s career, can be demoralizing. Bhardwaj is doubly hit because she took an education loan to finance her MBA.
From offers being rescinded and the date of joining being pushed back to not getting hired at all, the class of 2020 is facing various challenges. “Before covid-19, we saw growing optimism. Organizations were having forward-looking conversations on potential hiring. All of this has come to a standstill," said Rituparna Chakraborty, co-founder and executive vice-president, TeamLease, an HR solutions provider.
As the economy struggles under the impact of the pandemic, businesses are looking at survival strategies by taking measures such as pay cuts and lay-offs. In this scenario, while some companies will try and honour job offers, some may not be able to do so. “New graduates may take longer to get jobs, find fulfilling profiles and become financially independent, and even longer to support families. They may also struggle with paying off expensive student loans," said Deepali Sen, founder partner, Srujan Financial Advisers. If you’re in the same boat, here are some survival strategies for you.
Deal with that loan
If you’ve taken a fat education loan to pursue that course and are unable to bag the job you were expecting to, you may be in a bind. But settling this issue should be your top priority because having a loan burden balloon at the start of your career can throw your financial life out of gear.
One of the options to get out of this situation is to ask your parents for help. Dev Ashish, a Sebi-registered investment adviser and founder, StableInvestor.com, said though he’s been a strong advocate of not treating parents as a source of emergency funds, these aren’t normal circumstances. “If parents can pitch in temporarily for loan repayments, it could provide some relief to these graduates," he said.
If your parents are in a fix themselves, look at the option of renegotiating the terms and conditions of repayment. “It is expected that the banks will look at education loans sympathetically," said Adhil Shetty, CEO, Bankbazaar.com.
Usually education loans have a 6-12 months moratorium, which is the period during which borrowers don’t need to pay EMIs. Graduates can speak with the bank and extend the moratorium. “With the Reserve Bank of India (RBI) permitting a three-month moratorium, this period (the normal moratorium on education loans) will increase. You can discuss extending the moratorium further with your bank, so that you have a breather before you start repaying the loan," said Shetty. However, if you can spare some money, start paying the interest amount during the moratorium period. “This will not be a huge amount but will keep the repayment amount from bloating into a very large sum before your EMIs can start," added Shetty.
If none of this works, you could speak with your bank and repay the rest of the loan amount in smaller instalments over a longer period of time, but this could mean shelling out more in the form of interest. Bhardwaj said she has a moratorium of six months before she starts paying off her education loan. In case things don’t work out on the job front by then, she’ll have to fall back on her family.
TEMPER YOUR hopes
Since these are trying times, it’s very important to be more accommodating, especially if you have financial liabilities. There is already a dearth of offers so it’s advisable to not negotiate too much in terms of remuneration. “New pass-outs will have to temper their expectations in terms of the kind of jobs and salaries they are offered,"said Sen.
It’s a given that sectors such as tourism, hospitality and travel would be the most affected. However, services and software; real estate and allied sectors; and automobile will be hit too. If you are seeking opportunities in these sectors, you will need to be patient. “Graduates should look at the positives of having a job versus not having one. Getting a fulfilling job can wait for a while," said Sen.
Bhardwaj has realized it’s not going to be an easy ride, so she’s open to opportunities that lie outside her primary interests. She aims to find a way into the industry and prove her worth so that when things improve, she can land a better job. “Dream jobs will be tough to come by in the near term. Therefore, graduates should readjust to the new reality and try to make the most of it," said Ashish.
Learn to budget
If you’ve bagged a job that doesn’t meet your expectations in terms of salary, you’ll have to learn the art of budgeting, so your expenses don’t spill over. Sen said the focus in a situation like this should be on keeping expenses within limits and avoiding things that could land one in a bigger mess. Feel-good and impulsive buying should be avoided, as should taking loans to fill the gaps in cash flows. “It’s better to live in a paying guest accommodation or hostel for a few months instead of renting a place. This will save costs," said Sen.
Also, take lessons from this experience and ensure you work on building an emergency corpus. “Pandemic or not, before planning to invest in various options, work on building an emergency corpus of six months’ worth of expenses. It is in times like these that the importance of an emergency fund gets highlighted," said Ashish.
Don’t lose heart
There are arguments that the Indian economy may see a sharp recovery but there’s still looming uncertainty. Having said this, it’s important to not lose heart.
Instead, focus on staying up to date with your skills in terms of what the industry demands. You can also consider taking up some relevant short-term courses until things stabilize.
The good part is learning something new doesn’t always need an investment. “There is a plethora of free yet credible courses available online and some of them are run by Ivy League colleges as well. At the moment, the future is uncertain in terms of employment. Keep yourself employable, learn a new vocation and stay ahead of the learning curve," said Chakraborty.
You’ll have to find ways to set yourself apart. This will earn you some brownie points when things get back to normal.
Being proactive and optimistic is the need of the hour. So don’t give up.
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