One of the devastating effects of the COVID-19 pandemic on individuals has been the sudden reduced income, pay cut or layoffs by organizations seeking to lower costs and stay afloat.
If you suddenly find yourself taking home less than you’re used to, these tips will help you find a balance. Likewise, if you’re among the lucky few who won’t have a reduced income, using these tips to stay cautious with your spending will help you easily navigate the potential high cost of living brought about by the pandemic.
Create a monthly expense list
The first step is to create a new expense list based on your new salary. When building your new expense list, ensure to list the needs and wants in separate columns. This helps you to identify areas that you can cut back on more easily.
Try cutting your clothing, entertainment, and food spending by 10% across board. Making these types of cuts enables you to find the money that you need without heavily cutting back in any one area. One way to categorize where you can cut back is to try less expensive alternatives to some of your traditional spending habits.
It helps to work with a budget number in mind. Let’s say you have an income shortfall of N50,000 per month. Knowing this number gives you an idea of the exact amount you need to trim from your budget and also helps you prioritize your expenses.
Identify ways to save on necessities
You may want to consider scaling back on your cable TV bouquet to a cheaper option, reducing your internet cost and petrol usage for your generator. Although the savings may not be huge by cutting back on only one area, the combination may be enough to help you save money. Look into finding more affordable car insurance and find less expensive alternative shopping centers for your groceries.
Don’t cut your savings
Take a look at your financial goals and find a way to continue to save money. If you make a direct debit when you’re paid, it will be easier to keep saving because now when you’re dealing with an emergency is when you need to have savings to rely on.
While you utilize the above-mentioned suggestions, consider:
Keeping up with certifications so that you can easily find another job
Exploring alternative income streams
Learning a skill that will position you for the future
Final words: It takes discipline to handle a pay cut because you may have gotten accustomed to certain lifestyle expectations. It is, however, important to know that this is a phase that will eventually pass, and your ability to effectively manage your finances now will help you manage it better when things stabilize and your earning power improves again.