Millions of people in the United States lost their jobs in the pandemic. Some of those who were fortunate to keep their jobs experienced a reduction in salary. According to a report from CNBC, roughly one in three full-time workers had their pay cut due to the coronavirus crisis.
Getting a pay cut is stressful and demoralizing. After all, taking home a smaller paycheck with zero change to your workload is no one’s idea of career fulfillment or satisfaction.
What exactly should you do if your boss says that the company will reduce your salary?
Consider the following suggestions:
1. Reduce Your Monthly Expenses
Cutting down your monthly expenses requires a mindful reduction of your list of needs and wants. This typically involves reducing your mall visits and weekend outings.
If the pay cut will make paying your mortgage difficult, check if refinancing is possible. Doing this will help you save money, as you get to enjoy a better interest rate and lower monthly home loan payments.
As for reducing food expenses, make the effort to cut down your grocery bills by planning your meals better. Take some time including and eliminating food items that don’t fit in your overall nutrition plan.
If you want to cut down your food expenses further, consider growing veggies in your backyard. Plant kale, butter lettuce, peppers, and other vegetables that you and your family like. This will save you money and help keep you fit during the ongoing pandemic.
2. Maintain Excellence at Work
Giving less than your best in your job or relaxing your work habits can tempting. A pay cut can be demotivating, after all. Although your current situation may not be favorable, you should continue to show an excellent work ethic and a positive attitude. Remember that a lot of people lost their jobs during the pandemic. You, therefore, should feel grateful that you still have a job.
3. Start an Emergency Fund If You Haven’t Done This Yet
The ongoing global pandemic should have been a cue for many to create an emergency fund. If you got a pay cut and still don’t have this kind of fund, now’s a good time to start.
Your emergency savings will give you peace of mind knowing that you have something to fall back on in case you experience a further reduction in your salary – or worse – a job layoff. Start with enough savings that will cover three to six months’ worth of expenses. If you spend $2,000 a month on necessities, for instance, this means you need to have $6,000 to $12,000 saved in your bank account.
4. Avoid Major Purchases
Some businesses announce large discounts and big bumper sales to get more customers shopping in their establishment. Although this can be tempting, you need to control yourself from getting swayed by these promotions at this point.
Right now, you should postpone or even skip such major expenses for about a year or two. Your goal should be to keep your financial condition as stable as possible.
5. Negotiate New Benefits
A high salary isn’t the only benefit you get at a job. If you receive a salary reduction, negotiate with your boss or upper management to get new benefits. You can, for instance, ask for a change in your work hours or more vacation time. Although these benefits won’t improve your financial situation, they can help increase your engagement in the workplace and make your work life better.
6. Consider a Side Hustle
You may need to look for a way to bring more money into your home if your pay cut won’t work for your current expenses, family needs, and lifestyle. Side hustle in this case is a great solution.
Side gigs are small jobs you do outside your regular employment. They’re part-time (typically 10 hours a week or less) and are something that you’re good at and enjoy. Although a side hustle won’t give you a substantial amount of money, the money you earn will help offset the loss of a salary reduction.
7. Plan Your Next Career Step
When you’ve done everything necessary to protect and secure yourself in your current situation, you need to plan your next move. If you believe that your employer has slashed your salary indefinitely, you’ll want to look for another job. You also have the option to stay on and hope that things will go back to normal.
A salary cut can be emotionally and financially painful. When you’re in the thick of it, focus on staying resilient and positive. Whatever happens, take control of the situation and don’t allow yourself to be overwhelmed with the bad news surrounding a salary reduction.
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