With unemployment rates increasing, companies on hiring freezes and part time summer jobs not being readily available, it’s not surprising that 2020 has brought, or will bring, many a reduction in their income.
A decrease in an already tight budget is hard, and deciding what steps to take while managing the emotions associated with the income change can be paralyzing. The tips below are designed as an actionable to-do list to help you navigate a reduction in income.
Five Steps to Take When Your Income is Reduced or Lost
1. Check Your Financial Stats
Before we determine how to manage until our income increases, we need to know what our current financial situation looks like. How much do you have in emergency savings? In your checking account? What is your credit score? If you have substantial savings, you may be able to pull from your savings account to help offset deficits in your budget- though we don’t recommend depleting your savings completely. If you have a good credit score, you may be able to refinance existing debt at a lower rate, and therefore increase your cash flow.
2. Update (or Create) a Budget
Now that you have less money coming in, you may not be able to sustain all your previous expenses. Create a budget, and indicate which items are absolute needs and which are wants- things you could do without during this period. If possible, try to still include savings in your budget, even if it means opting out of a want. Savings will always be important as it will give you more options later when funds may not be easily available.
3. Look/Call for Discounts
Companies have been flexible during COVID-19 with payment due dates, interest rates and even free services. Take a look at your budget, and contact the companies you pay- perhaps your cell phone provider can offer a discount, or a lender can offer you the opportunity to skip a payment (push payment out to another month). These calls may result in savings to help you reduce the impact of the loss of income. You may even be eligible for discounts through your employer, alma mater or cell phone company!
4. Uncover Hidden Money
Many credit card points can be converted to cash, credit card payments, gift cards or other forms of currency that can help you during this time. Or perhaps you may have unclaimed property in your current state or another state you previously lived or worked in. Do you have a coin jar that you’ve been filling but haven’t deposited?
5. Become a Coupon Expert
Couponing used to mean buying the Sunday newspaper and spending hours sorting through circulars, cutting and organizing coupons. Nowadays, couponing can be as simple as downloading a plug in to your browser, or an app on your phone. Identify which stores you frequent, and see what coupons they offer. Some stores will even let you double down on coupons (use a manufactures coupon in addition to the store coupon).
A loss of income is usually stressful, it impacts your day to day and sometimes your ability to sleep at night. At HUECU, we are committed to your financial wellbeing and offer free financial coaching through GreenPath Financial Wellness (www.huecu.org/GreenPath). In addition to GreenPath, if you have a loan or credit card with us and have difficulty making payments, or if you want to explore refinancing and personal loan options, please give us a call at 1-617-495-4460.