Experiencing a drop in income can send us into a panic and our budgets into a tailspin. Unfortunately, it can happen to just about anyone. You or your spouse could be laid off, work could dry up if you’re self-employed, or you or someone in your household could fall ill. Times like these call for drastic money-saving measures.
If you have adequate savings, you will be able to live off of that for a few months. But whether you have an emergency fund or not, spending as little as possible is the key to making it through such tough times. You often don’t know how long your income will be reduced, so it’s crucial to stretch the money you have as far as possible. Here are some ways to do that:
1. Take a look at your bills and see what can be eliminated. Things like housing and electricity are hardly optional, but there are other things you may be able to live without for a while. Possible candidates include cable or satellite service, cell phones, long-distance plans, Internet access and gym memberships. Unless there is a pressing need for these things, consider getting rid of them until things are better.
2. If you or your partner is still working, make sure that you’ve claimed as many exemptions as you qualify for on your tax withholding. You won’t get as large a refund as you would with fewer exemptions, but you will have more take-home pay out of each paycheck.
3. Cut your phone bill down to a bare minimum. It’s a good idea to have a phone in case of emergencies, but we often have lots of extra features that we could live without. So cancel the call waiting, call forwarding and other such features, and get the cheapest possible long-distance plan (if you really need long distance).
4. Conserve electricity. Turn down the thermostat and wear more clothes when it’s cold out. Turn the lights off when you leave a room, and don’t leave the computer or television on when they’re not in use. These measures may not seem to matter much, but when used in conjunction with each other, they can knock a noticeable amount off of your bill each month.
5. Spend as little as possible on groceries. Coupons are good, but they don’t always save you more money than buying a cheaper brand. Try to combine coupons with sales for maximum savings, and don’t be afraid to buy store brands. They’re usually just as good as the big names.
6. Avoid eating takeout, and cook meals from scratch as much as possible. It takes more time than preparing convenience foods, but it can save you a great deal of money. If you’re short on time, cook large batches when you have a chance and freeze the leftovers to eat later.
7. Get help if you need it. Food pantries, thrift shops, churches and other organizations make it their mission to help those in need. If you truly can’t afford necessities, swallow your pride and ask for help. You can always repay the good deed by making a donation when you’re able.
When you’re dealing with reduced income, it’s easy to feel hopelessness. But there are ways you can stretch your limited funds further. By cutting out all but the essential expenses, you increase your chances of making it through your financial crisis until you find a way to replace your lost income.