There may be times when you have to adjust to a reduction in salary, maybe because you are looking for a job with less stress or you may just want to switch companies or careers. Recently, so many of us have found ourselves faced with complete uncertainty by the sudden loss of income due to the events unfolding around us. No matter the circumstance, taking immediate action will help you manage your money effectively and efficiently. With any salary reduction, it’s important to carefully consider when and how you are going to cut back on your lifestyle, the sooner you act on scaling back your expenses, the better your outcome would be.
Adopting the following would be helpful:
- CREATE A NEW BUDGET: Your first step is to create a new budget based on your new pay; Make a list of all your monthly expenses, this should have your necessities and luxuries in separate columns, and this will make it easier to find areas to cut back on. You may need to focus on only your necessities at first, to make sure that you can make it with your current salary. You can learn how to budget effectively with Payflow’s budgeting tools.
- CUT BACK ON SPENDING: Dealing with a salary cut is difficult no matter the circumstances surrounding it; nevertheless, it is absolutely necessary to get your finances under control. One of the easiest ways to do this is to cut back on non-essentials; which means you do not buy new clothes, spend money on entertainment or optional things, stop eating out or even cancel memberships and subscriptions.
- FIND WAYS TO SAVE ON NECESSITIES: You should also work on cutting your monthly bills. When your rent is up, look for a cheaper place to live, reduce the amount of food you waste and save money from food you buy, which may mean switching to a cheaper store to get food at cheaper prices. Another option is to scale back on your monthly plans like cable, internet and cell phone. Cut off all the bills you do not need.
- KEEP SAVING: It can be tempting to cut your savings to make ends meet, however this decision will hurt you in the long run. Even if it is just a little bit, continue to set money aside in your savings account. Take a look at your goals and find a way to continue saving. The Payflow application is an automated savings platform that makes saving easier. It’s important to have savings to rely on when you are dealing with an emergency.
- FIND WAYS TO MAKE EXTRA MONEY: Millions of people have side hustles or second jobs. Why shouldn’t you do the same? Think outside the box when you are looking for ways to earn extra cash, what are you good at? Do you do something exceptionally well that others will pay you to do? Monetize these skills and make cash from them.
Be sure you are not running up debt during this time. It takes discipline to handle a salary reduction because you are used to a certain lifestyle expectations. Consider switching careers completely if you are not happy or further your qualifications to increase your salary.