Job security is not something all of us are able to enjoy. In fact, very few people and positions are guaranteed their same role and pay years down the line. The saying “it’s better to be safe than sorry” applies all too well when discussing your career. Whether your job is at risk or you anticipate pay cuts, one of the most important things you can do is to reevaluate your finances. A quick review will help you take control of your financial situation and cope much better if the worst were to happen.
Take Stock of your Finances
Having a consistent understanding of your personal finances helps you live within your means. If you don’t already have your income and spending listed, what better time than now to create a clear view of your finances? Make sure to incorporate the main categories such as:
- Debt repayment
- Car insurance
The majority of people actually underestimate the amount they spend each month. With the possibility of being without a job or experiencing a pay cut, have an understanding of how you can live in the coming months without your current income. If you aren’t sure where to start, revisit your bank account statements from prior months and take the average expenditure of each category and plan future months accordingly. You may find that you can cut back in some areas.
Cut Back on Expenses
Once you have a clear view of your expenses, you will be able to work out what categories you can cut back on so that you can manage with a lower income. Even if you have a hefty savings fund that you can dip into, adjusting your spending might still be in your best interest. Take the opportunity to further supplement that savings fund to provide a little extra cushion if you lose your job. Revisit your expenses and separate them based on essential and non-essential items. Perhaps your daily coffees, newspaper/magazine subscriptions, and gym membership aren’t priority.
Take Control of your Debts
Reviewing credit card rewards and comparing money lenders should be common practice. However, this is even more so the case if you find yourself without a job. While you’re working, chances are your credit score will be better than when unemployed. Now is the time to revisit your debts. Compare lenders to get the best rates and look at paying off as much of the debt as you can, but be weary of early repayment charges.
Add Other Revenue Streams
Have you considered adding a job on the side? There are a number of excellent platforms online that put freelancers in contact with clients. How about using a resale website to sell items you no longer need? There are many, many ways to supplement your income – sometimes the best option requires thinking outside of the box.
The prospect of losing your job or having your paycheck cut is certainly stressful and anxiety-inducing. The best thing you can do it to prepare yourself by reviewing your finances and coming up with solutions for when you have less money coming in.