This year my income will decrease slightly each month. I made a change to my payroll deductions and will contribute more to my health savings account with each paycheck. Additionally, I’ll be losing some extra income that will impact my overall take home pay for the month.
These reductions will likely total around $300 a month which could have a significant impact on my budget. As I go into the new year, I’m going to need to make some changes to ensure I’m not overspending and putting myself into financial trouble.
- Reevaluate expenses. While I should take a look at all my expenses, I know that my groceries/entertainment spending is where I need to be more disciplined. I’m not very strict when it comes to grocery shopping and I know it’s costing me more money than it should. I may need to consider doing the envelope budgeting system to help me stay on track.
- Reduce bills. Not all bills are negotiable, but many of them depend on usage. For example, I can be more cautious with my water and electricity usage to help reduce the amounts charged each month. I can also look at my auto insurance and internet bills to see if I can reduce them as well.
- Look for ways to increase income. If I can’t decrease my expenses, my other option is to earn more. I’d rather not get a second job, but I can look into other ways to earn money such as making and selling stuff or providing a service to others.
When faced with a decrease in income, your first step should be to reevaluate expenses. Take a look at the things you buy and ensure that you are at least able to afford your needs. Then take a look at your wants. Which ones can you cut? The goal is to find a way to cut your expenses enough to cover the loss in income.
Have you ever dealt with a decrease in income? How did you handle it?