No matter how good job you have, there is always likelihood that the employer lays you off. Many employees strive to set aside money for a rainy day since starting, but nobody thinks of the other aspect of the coin: pay cut. An employer can whittle down your salary anytime for one reason and the other. Employers opt for this approach to reduce the number of layoffs during the recession.
Have your employer proposed pay cut? You are likely to find the job somewhere else, but then you may think the better of it because the opportunity for the growth is very great or you do not want to lose your comfort. Well, whatever the reason you are ready to bite the bullet, nobody likes to take the pay cut as it hinders your career advancement.
However, some people prefer stepping down and grab a side gig to earn livelihood, and if they face cash shortfall, they take out unemployed loans in the UK, but this option may prove very expensive in absence of steady income source. Pay cut can make survival difficult, but you can still manage. Here is how:
Negotiate with your employer
Employers generally know that a few employees are likely to accept the offer of pay cut. Laying off a large number of employees without any prior notice seems ruthless and unprofessional. Pay cut is a soft method to request employees to step down. Most of your colleagues are unlikely to accept this offer. If you want to stay in the company, you should ask your employer how it is going to benefit the organisation.
Since you have been brought down to low wages when you have already been struggling to meet all of your expenses due to high living cost, you should seek how your employer can compensate the loss. Ask if they are ready to offer your more casual leaves or reduce working hours. Try to negotiate for a retention bonus. You can also ask your employer if they allow you to work from home a few days a month. This will lower down your travel cost. Try to convince your employer if you want to save your wages for other regular expenses.
Be thrifty: figure out where to scrimp
Even though your employer allows you to do work from home for a couple of days a month, your financial situation is not going to be as same as it had been before. Whether you like it or not, you will have to create a budget to find out areas where to cut your spending. Slashing your grocery cost and cutting down on restaurant meals will have a big impact on your budget during the frugal period.
Try to buy things as per your needs; make sure that you need them immediately in future and stock up on things when the price is justified and you know they will not go perished before you consume them. In addition, you will have to find thrift shops for your clothes. As you are in a tight corner, you cannot afford to buy clothes just to fill your wardrobe. It is crucial that you avoid making impulsive purchases as credit card bills can cost you an arm and a leg. Try to make all expenses by cash.
Do not stop saving money
Pay cut does not mean you will stop saving money. It is okay to put aside the minimum as per your new salary. Savings will help you tide over when an emergency pops up. Even a smaller amount of emergency cushion can help you when you need money urgently. Many people fall to a predatory cycle of credit card bills because of zero savings.
The bottom line
Pay cut does not seem to be a favourable offer, but it is a better option than being unemployed, at least at least you have cash coming in to keep the wolf from the door. Even though you are confident that you can land a new job quickly, many people fail to have their resumes shortlisted due to fierce competition. Sometimes temporary pay cut does not pinch people as they love their jobs and they are satisfied with it.
