Dealing with a sudden drop in your income can be alarming and a bit stressful if you did not have a good hold on your finances, but there are ways that you can get around this.
Before we dive into what steps you should take when this happens – we are going to give you a friendly little tip.
Panicking will not solve anything. Instead, sit down, take a deep breath, and go over your new financial situation.
Here are some questions to ask yourself when dealing with a sudden drop in income:
- How much money are you bringing in with your new income?
- Have any new expenses increased?
- Are there certain things you don’t need that you could spend less on?
- Do you need professional help?
With that said, let’s look at the following ways that can help you when a drop in your income occurs:
Budget all the way!
The first thing we recommended you do if you experience a sudden drop in your income is to create a budget, as you need to know how much money you have lost and how much you now have coming in to cover bills, expenses and so on.
The first step to creating a budget is to note down your income and identify the amount of money you have coming in. Once you have done that, the next step would be to write down where your money is going i.e. your fixed and variable expenses.
Your fixed expenses include your monthly bills such as mortgage or rent payments, car payments and utilities. Knowing how much of your income these expenses take up will allow you to see what you have left to spend on your other expenses (variable).
Your variable expenses include your groceries, gas and electric, Wi-Fi broadband, TV entertainment and so on. Plus, you have your daily expenses such as your morning coffee at Costa or your monthly gym membership. These are the expenses that you should be looking at and finding ways to spend less money on.
- Instead of going to a café during your lunch break, prepare a lunch at home and bring it into work with you. Although you would be only saving a few pounds a day, think how much you would save in a years time!
- Also, instead of dishing out tons of money on a gym membership, you can turn your home into your personal gym. Just buy yourself a pair of weights, a workout mat, move the coffee table out of the way and BOOM, you have your own personalised gym. The best part of it is… you will be saving huge amounts of money. The average cost for a gym membership in the UK is between £50-£60 (as reported by The Guardian) which totals to a whopping £600-£720 a year, plus there is usually a £20 joining fee.
Earn a few extra Pennies
If the job you are currently in isn’t cutting it (perhaps your hours have been reduced), then finding a part time job can help boost your income. All you have to do is print out your CV and go around your local stores to find out if they are hiring. You could even get a part time job as a dog walker, local cleaner or even a job that you allow you to work from home, such as blogging or web designing.
However, if you are in a situation where you face redundancy, then you might want to consider looking for a new job all together. Visiting your local Job Centre can help you to find new work. Be sure to ask your old employer for a reference, as this will increase your chances of getting a new job.
If your working hours have been reduced or you are in the middle of looking for a new job, then checking to see if you are entitled to benefits might be an option you want to take if you want to increase your income.
There are many resources that you can use online to find out what you are eligible for.
If you have any sudden changes in your income, or you are finding that you are struggling to manage your monthly cashflow, then give us a call on 0330 041 2299 and speak to one of our qualified advisors.