Income Drop: 7 Steps to Take When Your Income Decreases

The last few years have been difficult times for businesses across a wide range of industries – and unfortunately it has had a roll-on effect for workers. In particular, many people have experienced a drop of income largely due to the wide-reaching economic impact of the global pandemic.
 
An unexpected drop in income can be devastating and leave you scrambling for ways to make ends meet, especially if you don’t have any emergency funds to fall back on. The good news is that these dips are usually temporary and, as life slowly goes back to ‘normal’, we are gradually seeing businesses and incomes recovering.
 
But what can you do in the meantime to try to transform the challenge of reduced income into an opportunity for positive change? We’ve put together a list of some ideas to inspire you:
 

1. Prioritise self care

 
One of the best ways to weather a time of economic hardship is to take care of yourself as much as possible. It’s natural to feel down in these times, so address your mental health first and be kind to yourself. Remember you’re not alone in this and consider using some positive approaches such as affirmations or meditation to keep your spirits up.
 
It's also crucial to look after your physical health, and this doesn’t have to cost a cent. Get out in the fresh air and go for a walk or run each day. Drink lots of fresh tap water. Restrict screen time. Prioritise getting a good night’s sleep. Buy simple inexpensive ingredients such as vegetables, pasta and minced meat and cook your own healthy and affordable meals. You’ll not only save money but also feel great.
 

2. Draw up a budget

 
When money is tight, it really pays to know exactly where every dollar is going – and a budget is the best way to do this. It might feel tempting to bury your head in the sand and ignore your bank balance, but knowledge is power. Take some time to carefully review your current cash flow and list out all your sources of income and all of your ongoing expenses.
 

3. Identify where you can cut back

 
Take a look at your list of expenses and rank them in order of importance. Then ask yourself a few questions:

• Can any of your current expenses be reduced or even eliminated?
• Maybe there are some subscriptions or memberships you don’t use that could be cancelled?
• Are you turning off lights and appliances at home when they are not needed, to save on electricity?
• Could you buy some of your groceries in bulk or from a discount supermarket to reduce costs?
• Could you cook more meals at home to save on takeaways and eating out?

Lots of small tweaks really add up and can make a huge difference to your weekly spending, which will help to reduce any financial pressure.
 

4. Reach out to lenders or service providers

 
A lot of people don’t realise that they can contact their utility and service providers any time to ask for better rates. Don’t be afraid to ask – remember you’re the consumer and you have every right to (politely) request better rates and service. The worst they can say is a simple no, but chances are they will find some way to help you, whether it’s with special concessions or deferred payment, if not an actual discount.
 

5. Explore side hustles

 
Why not try setting up a second source of income? There are so many ways to do this including Uber driving or delivering for Amazon, if you have a car. There are also many seasonal and temporary retail jobs on offer, and most hospitality businesses are desperate for good staff right now. You could also look at work you can do from home, such as running an ironing service, cooking food to sell at markets or baby-sitting for families in your neighbourhood.
 

6. Sell unused items

 
Another great way to generate some extra income is to sell any items around your house that are in good condition but are not being used. It’s surprising how many things we all have sitting around or in cupboards (from unwanted gifts to clothing that doesn’t fit) that could easily be sold for good money on Gumtree, Ebay or Facebook Marketplace. Getting rid of them will bring in some extra cash and also free up space in your home.
 

7. Reflect on the future

 
Finally, take some time to think carefully about your situation and how to make yourself less financially vulnerable in the future. Perhaps it’s time to start building up an emergency fund for future use? Do you need to consider moving to a less expensive property or suburb to reduce the ongoing pressure of your rent or mortgage? Maybe your short-term side hustle could become a permanent second job to supplement your income?

Whatever you decide to do, remember that trying to manage on a tight budget is a stressful experience for anyone, and the most important thing is to look after yourself and seek help whenever you need it. Also remember that there are lots of things you can do to help you manage the situation, from monitoring, evaluating and tweaking your finances and expenses through to planning your future budget.
 
The information in this blog post is general in nature and does not constitute personal financial or professional advice. It is not intended to address the circumstances of any particular individual. We do not guarantee the accuracy and completeness of the information and you should not rely on it. Before making any decisions, it is important for you to consider your personal situation, make independent enquiries and seek appropriate tax, legal and other professional advice.