How to Deal With a Pandemic Pay Cut

Many people lost their jobs during the pandemic and those who are still employed had to deal with slashed compensation to keep their positions. You may be one of the latter and are now wondering how to stay afloat financially. Check out the tips below to help you weather this storm brought by COVID-19.

  1. Apply for partial unemployment benefits.

If your salary has been cut, you may be eligible to receive partial unemployment benefits. Check the requirements in your state, but in general, you should qualify if you receie a reduction in hours or earnings through no fault of your own. These benefits are also available to workers who would not qualify before, such as independent contractors, gig workers, and other self-employed individuals.

  1. Work on a new budget.

As your income changes, so must your budget. Trim down your list of expenses to essentials. Review every single entry on your credit card bank statement and identify everything that you can do without. The idea is to strike enough wants so that your total  expenses are less than or equal to the money you have coming in.

  1. Be willing to make short-term sacrifices.

Take a hard look at your discretionary expenses. Depending on how bad your pay cut has been, you can start by reducing these expenses by 15%. Make it larger if you suffered a severe loss of income. This will make a big difference for you. For example, if your discretionary spending is $1,000 per month, a reduction of 15% will give you an extra $150 on your pocket.

  1. Save on necessities.

How much do you spend on groceries, insurance, and utilities? Is there a way to improve your budget in these categories? Maybe you can follow a meal plan to save more on food or talk to your service providers on how you can reduce your bills. Also, if you are struggling to pay your credit card bills following the impact of COVID-19 to your income, you may be  eligible for a lower interest rate, reduced or deferred payments, waived late fees, or a repayment plan based on your situation. Give your card issuer a call and discuss your options.

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