Manage Finances with This Trick When Experiencing Salary Cuts

Amidst the COVID-19 pandemic, numerous companies feel forced to cut their employees’ salaries as a solution to keep surviving. This may be a problem for you since your income won’t be as much as it used to be by the time of your next salary, even though your expenses are still in the same number. Therefore, here are several tricks that you can try before your salary drops, so your finances will be well managed.

Start with a Priority Scale
The first trick can be done by making a list of expenses. Start to write down all of your expenses in the last few months, then categorize them. You can sort out your expenses and see which ones are considered fixed expenses and which ones are not.

Afterwards, categorize them again into the primary, secondary, and tertiary expenses. The primary expenses are your vital and daily needs that are obligatory, such as food, electrical, water, and internet. The secondary expenses include necessary items which fulfillment can be delayed or replaced by other items, such as your clothing needs.

Meanwhile, the tertiary expenses refer to items that have no important or urgent functions and are not vital. If these items are eliminated, your life won’t be affected. With these categories, you can see your priority scale much clearer. As you experience salary cuts, it’s essential to minimize your tertiary expenses and other consumptions that do not directly affect your quality of life.

Debts and Installments are Top Priorities
If you still have debts or installments that need to be paid, then you should put these right at the top of your priority list. Make sure to pay your installments right after you receive your salary and before you spend it on other necessities. In other words, your monthly budget is the amount of salary deducted by your installment nominal.

Do not delay your installment payment. The faster, the better, and it will help your expenses in the months to come. During the payment, you can push your expenses, even the primary ones. For example, if your family likes to eat meat daily, then you can substitute the meat with other plant based protein sources, like tofu or tempeh.

Reduce Your Cash Withdrawal Amount
To avoid spending your salary on unnecessary items, you can decrease the amount of money that you withdraw when you’re shopping outside. You should also hold back on topping up your e-wallets or the online shopping applications on your phone. If you really need to top up your e-wallet to do a cashless transaction, only do so with the appropriate nominal.

When you’re shopping, create a detailed shopping list. Do your research on the prices of items that you want to buy, so you can estimate your total shopping expenses. This nominal will be the expenses limit everytime you go shopping for your daily needs.

Emergency Funds and Savings Allocation
If possible, create two separate banking accounts. The first one is used as your payroll account and to save money for your daily expenses, whereas the second one is specifically for your emergency fund and savings. In this second account, you will deposit a portion of your salary that has been deducted and set aside.

No matter how small your income is, make sure that you always set aside some of it and allocate it to your emergency fund and savings, at least 30% of your total income. So, your priority list should be paying installments, purchasing primary and vital items, then allocating money to emergency funds and savings. Your monthly emergency fund can still be saved on your main banking account. If it’s not used, you can transfer it to your savings account.

Consider Starting a Side Business
The last solution in facing salary cuts issues is start a side business that does not correlate with your main profession. You should consider doing business that can be performed at home, with small capital, and simple tools, like dropshipper or online business for examples. 

Adjust your business with your hobbies and skills. It does not have to gain huge profit instantly, just as long as it can sustain you during the pandemic. The income from your side business can be allocated to your emergency funds and savings if your main income is only enough to cover your daily expenses. 

If you feel that having a side business will greatly benefit your finances, especially after a salary cut, you can rely on PermataKTA to buy some tools for your side business at home, or to pay for your online courses to enhance your skills. PermataKTA from PermataBank is an unsecured loan that you can apply via a mobile banking app from PermataBank.