Financial guide before joining a Startup

Joining Startup and accepting a challenge is slowly turning a passion among employees (fresher and experienced professionals). While fresher who are in their 20’s possess lesser risk than the experienced professionals, who tend to sacrifice the perks in a big company to join a startup. Offering stocks rather than cash are common among startups which (at times) turn like a gambling trip to Las Vegas. Further there always remains the risk of salary (cash component) being reduced or at times the employees might have to sacrifice their entire cash in the event it becomes difficult for the startup to raise funds. There is always a greater risk of losing a job (Tiny Owl very recently) in the event of closure. A general statistics put that one in twenty really hits it substantially and one in five continues at all.

In fact I believe before joining a startup, an employee should stress on the below mentioned points apart of the general financial planning which the employee would have made to achieve his/her goals:

1. Keep reassessing your financial situation

Live within your means, set up a proper budget, and save money. Make sure you have all your debts and assets accounted for in your financial snapshot. Keep looking at alternate ways to reduce your expenses every month.

2. Trim Your Budget to Boost Your Emergency Fund

Re-evaluate your budget to redirect savings to your emergency fund—which should be your biggest financial priority. The typical 3-6 months goal for an emergency fund may seem like a big goal, but because you don’t know how long unemployment will last, it’s best to just try to save as much as possible.

3. For Homeowners it is better to consider refinancing

Home Loan repayments at times are the biggest expenses on your budget, so keep looking for avenues to refinancing with a different lender. A nominal percentage reduction can boost your savings much more. This will offer a cushion at the time of emergency.

While I’m not a financial or career advisor, I’m hoping these points will help someone who’s there/planning to join a startup.

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