A finance crunch may be inevitable despite all the savings and income in place if you are not able to manage your expenses well. The pandemic has been one of the latest examples of how companies had to layoff employees and revise their debt models. In such cases where the corporate world and the market were facing such alterations, the employees have been equally affected too. Many people got relegated and had a salary cut while some even lost their jobs. However, these unforeseen circumstances have made us realize how one should always manage his/her finances well and always keep an emergency fund ready.
6 Tips to Help You Handle a Pandemic Pay Cut
When life throws you challenges, you need to devise new strategies for overcoming them.
Having a salary cut is one such challenge which can make you feel vulnerable and helpless, but you ought to help yourself by reprioritising your expenses to manage your finances well.
Here are some tips which will help you handle a financial crisis–
1. Revise Your Budget
Everyone has a monthly and annual budget which entails all the necessary and leisure expenses.
This budget has to be revisited and analyzed to make some minor and major adjustments. For instance, you can make a list of your daily expenses for rent, groceries, gas, and loan payments. You will have to cut-short on some of the necessities for saving some part of your income. This will make sure your monthly expenses and bills don’t exceed your monthly income.
2. Reduce Your Monthly Expenses
This can be treated as a part of revising the budget. Reducing the monthly expense requires a mindful trimming of your list of needs and wants. For instance, you can’t cut short your monthly rent, but you can always reduce your weekend outings, mall visits, and dining outs.
Also, you can make some effort to reduce your grocery bills by planning your meals better. You can find out and eliminate the food items which don’t really fit in your nutrition plan.
3. Avoid Major Purchases
Big bumper sales and discounts on big items can always be tempting, but you need to control yourself from getting swayed away at this point of time.
You can always postpone and skip such expenses for about a year or two till your financial condition gets stabilized and better. Also, avoid taking loans and EMI installments for purchasing bigger items. These options look tempting in the beginning but do nothing but add on to your monthly expenditures.
4. Apply For Partial Unemployment Benefits
In the current situation of the pandemic, the government has announced certain benefits for the people who have lost their jobs or salary cut. The eligibility can slightly differ for different states, but the main objective is to provide some relief to the people who have been facing financial crises due to the pandemic.
Apart from this, you can always avail moratorium loans in case if you are unable to pay your EMIs or loans due to a potential salary cut.
5. Additional Income Options
Having a salary cut can be humiliating but you don’t have to draw a line to explore the limitless other job opportunities that await you.
You can always take up a part-time job of teaching kids some basic crafts, fostering dogs, etc. You can also look for some freelancing job opportunities as the gig economy is one of the rising aspects of the global market. This extra income might help you in fulfilling your necessities which you had cut-shorted.
6. Start An Emergency Fund
If you are able to spare some money apart from your monthly expenses, you should definitely start saving for an emergency fund. Also, you can liquidate these savings into something which can be beneficial to you in the future.
You may or may not rely on the various funding and insurance agencies but you can always keep aside some money for future emergencies.
A financial loss or a salary cut can happen to anyone. Such situations have to be dealt with wisely. Cutting some of your discretionary expenses and managing liabilities hand-in-hand can help you sail through such adversity. You can create a new budget and curb some of your luxury expenses for a time being and just focus on the necessities which are important for a basic living.