The struggle to remain strong has been one of the major concerns for businesses since the beginning of the year 2020. There is no other reason for these changes other than the Covid-19 pandemic. To remain strong in the storm and maintain a good presence in the business world, many businesses have taken some drastic measures to cut their cost. One of the measures taken is to cut employees pay or lay them off. If all you got is a pay cut, we can say lady luck shone on you. Although getting a pay cut is not what you hoped for, it is way better than losing your job and getting no pay. As much as we all want to blame the pandemic for everything, in some cases, you might get a pay cut when you change jobs to a less paying one or when you are not performing up to expectation. If you are a victim of a pay cut in Nigeria, you can survive with the following effective financial planning strategies discussed herein.
A new pay cut calls for a new budget
A budget helps you to know what you can afford and the most important things to buy. You probably had a well laid-out budget for your previous pay and already got your life in order. We are sad to inform you that you have to cut your budget to suit your new pay. A new pay calls for a budget cut. You need to understand that there are some things that have become luxuries with your new pay and you have to remove them from your list.
Spend less, make more money
Your new pay is not as rosy as it used to be, so you need to cut back on your spending. Buy only the things you truly need. Things you can do without should be cut off. However, you can maintain your previous lifestyle if you look for other sources of income and make more money. You don’t always have to depend on your salary, you can look for some other side businesses that would fetch you even more than your salary. There are many businesses to venture in if you are observant enough to decipher them. Now that you need more money, you should be on the lookout. It is not going to be easy but it is the only way to maintain your lifestyle and not go into debt.
Avoid the urge to take loans
Talking of debts, you should avoid the urge to take loans. No matter how tempting it is, avoid it. The last thing you want is getting yourself hooked with no hope of getting more money.
Redefine your goals
If your goals involve spending a lot of money, kindly reconsider it. You can break down your goals into short and long-term goals. This should help you to reduce your financial pressure and work on the immediate and most important goal.
Try the 50/30/20 budget rule
The 50/30/20 rule says you should spend 50% of your net income on your needs, 30% on your wants and 20% on your savings. This budget rule is an important guide you need to plan your finances. By now, you should be able to differentiate between your needs and your wants. Anything you can do without that won’t cost you your health, wellbeing and your life are wants. Your needs are essentials like; shelter, food and healthcare.
The fact that you are earning little doesn’t mean you can’t save. You don’t have to be earning six figures before you save. Cultivate the habit of saving, no matter how little it is. It would be nice to have an emergency fund that would save you when your salary reneges on you.
Effective financial planning takes a lot of discipline and commitment. You don’t have to wait till you get a pay cut before you plan your finances. To live a debt-free life despite the pay cut, follow the tips we discussed above.