What to Change When You Suffer A Pay Cut

As we’re speeding towards one of the biggest recessions this country has ever seen, we’re all facing job and career uncertainty.

Millions of Americans have been laid off and more have been furloughed. And those who have jobs may be facing pay cuts as the economy worsens. But with all that in mind, it’s less-than-ideal to start a job search during a crisis where so many are already looking for jobs.

During this difficult time, we should remind ourselves that this is all temporary. The economy will bounce back. That’s not up for debate. But what we cannot know is when that comeback will happen.

That’s why it’s important to take care of ourselves now. And if you’ve suffered a pay cut, here are some things you can do to help ensure you can weather the storm.

Evaluate any subscription services

They may not seem like much on their own, but too many subscription services will cost you more than you expect or can afford right now. Make a list of everything you currently pay for on subscription. This includes streaming services like Netflix and Pandora, but it also includes membership programs and access to news through a newspaper or online subscription.

Be sure to check your bank and credit card statements for a full picture. There may be a subscription or two that you’ve forgotten about.

Next, take a hard look at that list and evaluate how often you use each service. There may be some that you can obviously cut off right away (including any you’ve forgotten) and there may be others that you need to think about.

Now, you may also want to take a look at products you have on subscription with online stores like Amazon. Think about whether you really need them as often as you’re getting them, or if you even need them at all.

If this pay cut has you living paycheck to paycheck, a poorly-timed subscription payment can cause your bank to overdraft, which could end up turning what was a convenience into a nightmare.

Look for other income streams

If you’ve experienced an unexpected pay cut, you may be able to offset it (and then some) by adding another stream of income to your life. You can do this by delivering for any number of delivery services or make money online by starting your own blog or business.

Adding to your income in other ways can also help give you some assurance outside of your current employer. It’s empowering to know you can make money outside of your 9-to-5 job, especially in uncertain economic times.

Cut unnecessary spending

Most of us have many expenses that aren’t exactly necessities. If you’re enjoying meal delivery from a service like Hello Fresh, you can probably cut that out and make meals much cheaper at home. Plus, it’ll spark your creativity by planning your meals for the week and getting the perfect amount of groceries.

Now is also a good time to cut spending on any unnecessary clothing and gear. Your entertainment budget may have already been slashed with stay-at-home orders, but look for places you can cut further (and make sure you’re not shopping online like it’s a competitive sport). Unfortunately, this may not be the time to get takeout whenever you have a craving.

Save more (if possible)

Naturally, you’re going to have less money overall when you suffer a pay cut. So putting even more money away may sound ridiculous. And in truth, it’s impossible for many people. But if you can possibly save more than you did previously, this is going to be a wise financial move.

Maybe it’s not as easy as cutting discretionary spending, but if you can shave off anything in your current budget to add to savings, you’ll be better off. Not only will you cut your monthly expenditures, but you’ll have more in the bank for a rainy day. Everyone is uncertain about the future, and even if we’re still employed today, we should all be preparing for the worst.

Reconsider the car payment

If you have one or more care payments, look into other options. If you can trade that car in for a cheaper or older model, it may be a better call. Just be sure you’re getting a car that functions well. You could end up spending more if you buy a car that needs regular maintenance.

And if you are worried about maintenance costs, consider a roadside service like AAA. This is an added expense, but it can keep unexpected repair bills down.

Pay off debt

Although this is a time where we want to save money and hang on to what we have, if you’re in a position where you can pay off any debt while keeping your emergency fund intact, it’s probably a good idea. You may even want to consider using any stimulus money to pay off or pay down debt. Start looking at the lowest bills you have and seeing if you can pay those off first. This will remove a monthly payment, which can give you some room to breathe.

No one wants to hear that they’re getting less money for the same job, but it’s a reality for many people these days. With some lifestyle changes and some luck, we hope to be able to stretch it through until this is all over.