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In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Market Wisdom

Budgeting When Your Income Takes a Hit

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A loss of income can quickly change your lifestyle. To handle this change, it’s important to go into extreme budgeting mode and save as much money as you can.

Income Can Decrease Fast

There’s always the possibility of losing the income you currently have. It may come from a decision you make or from an unexpected event. Here are some common reasons why your income can decrease:

  • You lose your job or get demoted
  • Can’t work due to an illness
  • You decide to move from full-time work to part-time employment
  • Taking a sabbatical from work
  • You’re transitioning from employee status to freelance work

Whatever the reason for the decrease, it’s best if you deal with your loss of income quickly to make sure you stay on your feet and maintain a positive attitude.

Losing income can be a scary situation if you aren’t prepared and don’t know what to do. Here are some ways that you can cut back on expenses each month:

Eliminate All Non-Essential Expenses and Be Prepared

When your income is coming in at a steady pace, it’s easy to be relaxed with your money and spend it on items that you desire and don’t need.

If you suddenly lose your income and have to deal with the reality of having less money to spend each month, it can help to cut out all non-essential expenses. Typically, one of his biggest expenses is your cable bill. By eliminating it, you may be able to save as much as $150 per month.

This may be a time to go to the library, which is free and pick out a few good books to entertain yourself. Here are some other non-essential items that you can probably live without for a while:

  • Expensive gym memberships
  • Takeout or delivery
  • Online subscriptions
  • Drinks

When you’re making a list of items to eliminate, make sure you don’t include your savings fund. Treat your savings account like any other essential bill so that you’re saving a little each month.

You’ve got to be prepared for anything because you can’t plan for the unexpected. It’s important to know your options if you need money for an emergency, like an unexpected car repair, that your savings won’t cover.

Do the research and have options available, whether it be a local pawn shop, loans online, reliable family members, or charitable entities.

Utilize More Economical Transportation

Another way to save money is by cutting down on the use of your car.

If you’re in an area where you can take advantage of public transportation, it’s much more economical. If you’re close to your destination, consider walking, which not only saves you money but provides you with fresh air and exercise.

Coupons Are Your Best Friend

When you need to save money and go into extreme budgeting mode, coupons can become indispensable. By utilizing store coupons and manufacturer’s coupons, you can save quite a bit of money.

When you’re able to use two coupons at once on the same item or on a special deal that provides you with an additional free item, the savings can add up. One of your main goals when couponing is to search for multiple deals.

If you’re able to get three or four deals at once from a Sunday newspaper, you can cut the regular price of essential items considerably. Coupons are available from grocery stores, manufacturers, online and in the newspaper. Create a coupon binder and keep it handy when you go shopping.

Find Less Expensive Alternatives

It’s easy to get into a routine and perform the same habits when you have money to spend.

However, when you need to budget your money, you want to think about finding the least expensive alternative for expenses you make regularly. This might include your hairdresser or the grocery store you visit.

Try and utilize generic pet food and supplies, and be sure to cut down on electrical use as much as possible.

Live in a Cheaper Space

It’s easy to get comfortable in a residence that costs more when you’ve got the required money rolling in, but when that changes, it’s best to find less expensive living arrangements. This might include downsizing from a two-bedroom apartment to a studio or getting a roommate to share the expenses.

When you become disciplined and cut out unneeded expenses, you should be able to live comfortably. Look for more alternatives you may have not thought of and utilize these ideas when you need to save money.