Why & How to get savings on an overdrive to be financially prepared for income disruption

The year 2026 is turning to be a year of financial distress for most of the working population in India, with increasing worries of income disruption. These fears are being accentuated by job loss fears due to AI, impact of macroeconomic/geopolitical volatility and equity markets underperforming for the last 2 years.

For time immemorial, the benefits of saving well for uncertain times have been eulogised. Yet, few have actually followed this advise. Now is time to significantly step up savings. Because in an uncertain future, financial resilience ultimately comes down to one thing: having enough money to keep one going.

Saving 30-40% of the take home should be the primary goal going forward. To do this one will need to look at lifestyle expenses first. It could be cutting down on upcoming festival expenses/downsizing the family vacation or reducing the monthly lifestyle spend. Then relook at the essential expenses to see if any reduction is possible. Reducing spends is akin to making dietary changes in a health situation. Individuals need to find a way to make a sustainable change.

Credit can be a powerful tool if used wisely. Alas, data from RBI shows that households are borrowing more for consumption that asset creation, with majority of debt being unsecured loans like BNPL, personal and credit card loans. With growing concerns around income disruption, reducing loans is critical to lowering financial vulnerability.

Review all loans and see what high interest debt can be cleared off right away. Consider using assets such as gold to refinance expensive debt at a significantly lower interest. Do not take on new debt – it is important to keep EMIs limited to 25-30% of take home income.

In case of the inability to repay loans, it is important to communicate one’s financial situation to lenders at the earliest and check for debt resolution options like loan restructuring, debt consolidation and balance transfer or one time settlement.

Health insurance is an absolute essential for all. All employees covered in a group cover are allowed to migrate individual health insurance with the same insurer. By porting the policy, waiting periods already served are carried forward but the insurer may conduct a fresh health check and there could be a change in the premium. Still, this is the best way to ensure continued coverage for self and dependants, including parents. The key is to know the operational procedure and act swifty, as one is allowed only till five days after the job loss, to initiate the process.

Finally, families should have an open conversation about financial stress and the changes that may need to be made at home. Parents should avoid going on a guilt trip if certain purchases or activities for their children need to be reduced, postponed or skipped during financially uncertain times.

Income disruption may be difficult to predict, but the financial stress it creates does not have to be inevitable. Building adequate savings, keeping debt under control, having financial security covered and having a plan for the unexpected can provide a critical buffer when income is disrupted.

Mrin Agarwal is a financial educator and founder director of Finsafe India Pvt Ltd.