Investment banks are cutting bankers’ bonuses after a tough year for the industry. According to the Wall Street Journal, earnings at big banks fell by more than $50 billion last year, the biggest year-over-year decline on record.
As a result, leading firms such as JPMorgan Chase, Bank of America, Citigroup, Jefferies Financial and Goldman Sachs will all cut annual bonus payments by up to 45%. Furthermore, the article warns that some investment banks may also lay off people next year.
If you’re living paycheck to paycheck or struggling to save money in the face of skyrocketing bills, it can be hard to have much sympathy for bankers facing pay cuts. After all, top investment bankers can take home hundreds of thousands or even millions of dollars a year, and that’s before considering their huge bonuses.
But the broader question is whether what happens in the financial sector can happen in other sectors. In other words, could your job be next? At the moment, the US labor market remains relatively strong despite layoffs in the tech sector. But a few weeks ago, PepsiCo announced it would lay off hundreds of workers at its US headquarters, sparking fears that the cuts were spreading to new areas.
There is a lot of uncertainty about whether we will enter a recession next year, particularly whether high unemployment can be avoided. However, there is a possibility that the problems in the banking and technology sectors are just the beginning, and we could see widespread layoffs in 2023. While we don’t know for sure, it’s worth preparing.
Take stock of your finances, specifically how much money you have in your bank account and what your monthly outgoings are. If you lost your job, how would you cope financially? Do you have three to six months of living expenses sitting in a savings account? If not, perhaps there are steps you can take today to build your emergency fund.
If you are carrying high interest debt, look for ways to pay it off. In the worst-case scenario, when your income drops or you lose your job, those debt payments can take a big bite out of your budget and make it even harder to stay afloat. Paying off debt won’t happen overnight, but the more progress you can make while the job market is relatively strong, the better.
Warning: the highest cashback card we’ve seen now has a 0% investment APR through 2024
If you use the wrong credit or debit card, it can cost you serious money. Our expert likes this top pick, which has a 0% intro APR until 2024, a crazy cash-out rate of up to 5%, and somehow no annual fee.
In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.
Read our free review