7 Tips to Thrive When Your Income Has Been Reduced
Experiencing a reduced income can be challenging, but with a bit of planning and effort, it doesn’t have to be too difficult. Implementing a strict budget, reducing your expenses, and exploring additional sources of income will help you maintain financial stability during this time.
Here’s what that might look like.
1. Take on a temporary side hustle
There are plenty of ways to make some fast cash, like signing up to drive for Uber or Lyft, and delivering groceries and food through Uber Eats or Instacart.
Taking on a side hustle is a great short-term strategy to pay some simple bills, but it’s not something you can rely on long-term. Most side hustles don’t pay much and require a significant investment of time and energy in return.
Instead of getting comfortable with a side hustle, keep your sense of urgency and continue working on a more stable, reliable source of income.
2. Collect on debts owed to you
One of the fastest ways to recover some income is to collect on debts you are owed. This can include simple debts, like that $20 your brother borrowed from you last month, or larger debts that have been outstanding for years. If someone can’t pay you what you’re owed, offer them a good discount for a lump sum. For example, if someone owes you $1,500, offer to resolve their debt for $1,200 or even $1,000. You’d be surprised to see how resourceful people can get when offered a deal.
Another way to collect on debts you’re owed is to consider sources of unclaimed money, including situations where you could file a lawsuit to recover compensation. For example, if you were injured by a defective product or a dog bite, don’t ignore the situation and pay your own medical bills. In these circumstances, you shouldn’t be covering your own bills. Consider holding the responsible party accountable through the court system. It will take some time, and you won’t get paid right away, but it’s the right thing to do and will provide you with significant relief.
3. Check to see if you are living beyond your means
If having less income makes it hard for you to pay basic bills, reevaluate your living standards. If you’re already living a cushy life and you don’t have another source of income lined up, start downsizing. Don’t allow yourself to live on credit, hoping you’ll find more income soon. Do what’s necessary to avoid going into debt. That might mean moving into a smaller house or apartment or cutting out unnecessary expenses, like dining out and monthly shopping sprees.
4. Don’t spend any money without a plan
When you assign every dollar to a specific purpose, it can’t be spent without a plan. This will eliminate impulse and unplanned purchases. It can be tough to see exactly how much money you’re spending on things you don’t really need until you have to account for every purchase ahead of time.
5. Cut down on digital entertainment
There’s a good chance you have multiple subscriptions to streaming services, music apps, and software. Revisit these expenses and cut what you don’t actually need. You can always get another Netflix account when your finances are stable again.
Digital entertainment is nice, but there are plenty of things you can do instead of spending time on the internet. For example, you can start reading books, engage in a craft or hobby, learn how to cook, or just sit quietly outside and enjoy nature.
6. Sell items you don’t want or need
You can get some cash in the bank fast by selling items you no longer want. Decluttering your home is always a good idea, and in this case, it can generate some extra money. However, skip the garage sales and post your items online. People who go to garage sales expect to pay next to nothing for items, including valuables.
7. Negotiate your service expenses
Start negotiating with your service providers, like your phone, internet, and insurance policies. Many companies are open to negotiations and will give you a better deal if you ask. For example, reach out to your cable company and ask if there’s a deal available that will save you some money. You might need to sign up for a different service or cancel your current plan and put it in someone else’s name, but it’s worth the effort for significant savings.
Be proactive
Experiencing a reduction in income requires proactively managing your finances and rebuilding what you’ve lost. By managing your budget, curbing non-essential spending, and exploring new options for income, you’ll be in a better position to meet financial challenges while you work to recover your lost income.
