Due to the COVID-19 pandemic, many businesses have had to cut costs, which may have led to cutting back employee salaries. A pay-cut can be a difficult thing to deal with financially, but there are ways to manage it. Here are some tips.
Create a new budget
A budget is a good way to help you manage how you spend your income and it needs to be tweaked and changed as your income changes. When creating your budget, begin with the necessities and then end it off with the luxuries- which you may need to reduce or remove altogether. If all your money seems to be going to necessities, then you’re going to have to make further changes and search for cheaper options for things such as medical aid, insurance, phone costs, etc.
Cut back on the luxuries
We all enjoy spending money on clothes, entertainment and little things we don’t really need, and this is often encouraged, because you work so hard and you should reward yourself, right? However, if your salary’s been reduced, you’re going to have to reduce the amount of money you spend on luxuries by about 10%, depending on how extreme your salary cut is. Be sure to keep a close eye on your spending habits.
Stay away from big loans
Having your salary reduced may tempt you to take on a loan or two, but it’s not the best idea because loans have to be paid back- with interest. It’s best to cut back your costs rather than adding an additional one. If your situation is really dire and taking a loan is the only way out, then be sure to do the necessary research to make sure you choose something that’s most beneficial to you, at very little interest.
Other sources of income
You might need to put your hand in your bag of skills and talents to start your own little business or find other ways to earn an extra income. The greatest part about doing this, is that you may not have to cut costs or even change your lifestyle if you’re able to make up for the shortfall.
Ask for help
Having to take on a pay-cut can be a really stressful and anxiety-inducing experience. Speaking to your financial advisor or someone you know who’s good with money, can really help you manage this change better. It might also help to find someone you trust and can openly speak to about some of the changes you’re facing and how much strain they’re putting on you. If your mind isn’t healthy, it’s going to be difficult to make the right financial decisions.
Finances can get difficult to handle, especially if there’s a big change, but with the right tools, a bit of help and a some discipline, you’ll get through it. If you need advice on handling a pay-cut, or even trying to handle your finances during a pandemic, you can always reach out on Ask CellCgirl. Also, be on the lookout for the #FinancialFitness tips we share every Monday on our Facebook, Twitter and Instagram.