If you’ve had a sudden drop in income, whether it’s because you’ve lost a job, had a pay decrease, are on maternity leave, or due to illness,- it’s a shock. Here are tips to manage with less money.
Tips kindly shared by StepChange Debt Charity
If you’re struggling with your financial health, contact StepChange for free expert debt advice
It’s a hugely unsettling time right now, but this may be made to feel worse if you find yourself furloughed by your employer, or even lose your job entirely.
Whether the change in your income is large or small, it can be difficult to reset your spending habits and adjust to a new circumstance.
What does furlough mean?
Furlough is defined as “temporary leave of employees due to special needs of a company or employer”.
As you know, many businesses have had to close in response to the lockdown.
Therefore, the government has offered to pay 80% of an employee’s wage if there is no longer work for them to do, through a scheme called the Coronavirus Job Retention Scheme.
This means that while you get to keep your job and you’ll still get paid, you will also need to deal with a reduction in your income.
How to manage with a drop in income
StepChange Debt Charity has put together a guide for people who have had a reduction in their income, in an effort to help people budget and avoid getting into debt.
StepChange’s guide is made up of 11 simple steps;
- Know your rights
- Get emergency help if you need it
- Check you’re being paid properly
- Contact your creditors
- Gather your debts
- List your income
- List your spending and outgoings
- Create a budget
- Get debt advice
- Work out where you can save
- Take back control!
You can find out more info on how to carry out the above steps, including links to helpful resources and tools in the guide.
We think the guide is fantastic, and probably a good idea for anyone to do, even if you haven’t been financially affected by the current crisis. Having a detailed understanding of your financial situation and building a budget accordingly is infinitely helpful in keeping you organised and on top of your finances.
To find out more, head to StepChange’s furlough guide and get started.
Living on less
Having struggled, lived with and survived our debt mountain, the best thing anyone can do when there has been a change in circumstances is not panic.
Maybe at first, take a day process what’s happened, have a cry if it helps, but don’t bury it and hope things will get better on their own.
If you ignore issues with money they won’t magically get better – things will get worse, I’m sorry to say.
Having buried my own head in the sand for years, please don’t do the same. It’s far easier and quicker to deal with things before they turn into massive issues.
Take a look at Simple Lessons Learnt From Being in Debt.
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