The recent global outbreak that is prevailing for almost two years now has significantly impacted the U.K.’s economic condition. From small business to large enterprises, from CEOs to salaried employees, everyone is going through a hard time, struggling to bridge the gap between their income and expenses.
Companies with a critical down surge of revenue have been compelled to announce approximately a 50% pay cut for their employees. It may have happened with you as well! But there’s no way you can give up as you have families and partners to look up to.
Therefore, how to live through this financial crisis is well-explained in this blog. Reading it will be worth your time…!
Financial Difficulties That Might Occur
Let’s get started with the challenges first to understand the resolutions better.
You might already know how the economic landscape has altered drastically for people across the U.K., with layoffs, unpaid leaves, and pandemic pay cuts chasing them day-to-day. These lead to serious financial concerns for many people, like you. Some of the issues that might occur are–
- Unemployment or earning lower than expected often compels to use the credit card for living expenses. It results in huge debts, hard to pay back within the deadline. As a result, your credit score may see a down surge.
- The stress due to a 50% salary deduction can cause severe illness or disability, which increases the medical expense when you have a lesser regular income.
- With a significant pay cut in the source of earning, you may experience financial challenges in protecting the assets that took decades for your parents to achieve.
- If you are going through a divorce during the pay cut due to a pandemic, it may be difficult for you to bear the alumni cost.
- While there’s a regular deduction in your salary for months, you may be asset rich but poor in cash. It makes difficult for you to afford the living and utility cost as before.
- With the reduced or no income, you might be compelled to sell out a few things with which you have an emotional attachment. Despite unwillingness, you may have to part away with some assets that are close to your heart, like home, vehicle, business, etc.
- You might find yourself in addiction due to the stress of a 50% pay cut or unemployment, which likely result in more spending than earning. As a result, you tend to exhaust your savings and emergency funds.
These are some of the major financial crisis that can crop up when you are already harassed due to 50% salary deduction. Well, it’s not the right time to panic. Instead, read through the following tricks of effectively managing finances during hardships.
Tips To Handle Salary Pay Cut During Pandemic
The money-management ideas as mentioned here can help you stay afloat financially even with a 50% pay cut for months. Find out about them in detail–
- Get underemployment benefits offered by the Government
Soon after the World Health Organization announced Covid-19 disease as a pandemic on 11th March 2020, U.K. publicized specific provisions for unemployed and underemployed people in Great Britain.
It means you might be able to claim the benefits if you are –
- Getting less salary than before
- Suffering from the loss of job (or, you have been made redundant)
- No more self-employed
In addition to the Universal Credit, certain more options have been added to the list. They include housing benefit, child tax credit, income-based Jobseeker’s Allowance (JSA), working tax credit, income-related employment and support allowance, disability or illness allowance, and much more.
- Take out debt consolidation loans
With a 50% salary pay cut every month, it will be difficult for you to repay all your outstanding dues within the deadline. If you default on any instalment, it will affect your credit score badly. This can also lead to CCJ that can make your life miserable.
So, one of the best solutions is to avail of a debt consolidation loan that can cover all your instalments into one payment. In case of such financing, you can take out loans for bad credit with no guarantor. Lower interest rate, longer tenure, and flexible repayment facilities make this long-term loan system one of the best options for people in debt due to paying cut.
- Opt-in for alternative income sources
In today’s world, the working environment has modernized. Now you have hundreds of options to work remotely from the comfort of your home. Your productivity matters in those situations instead of your physical existence.
Remote working opportunities will include temp agencies, gigs economy, and freelancing. There are sites like Upwork, Guru, FlexJobs, Freelancers, etc., where clients post their requirements. Through biding, you can secure a suitable project for yourself at a good price.
- Set up a new budget for a new lifestyle-
You can’t lead that luxurious life if you are living on a salary pay cut. With reduced income, you have to revise your budget with new adjustments. If you are new to budgeting, you can use budgeting software and tools that can automate the process once you input the data. Excel sheets and spreadsheets can also work out.
When you start budgeting, the first thing that you’ll review is the credit card and bank statement to ensure you haven’t missed any recurring expenses. Next to each expense, you must comment whether it falls under the necessary or unnecessary category.
Finally, trim down the discretionary expenses like shopping, subscriptions, entertainment, addictions, etc., to sustain well enough even with a 50% salary pay cut.
The Bottom Line
You are most likely to experience any of the financial issues mentioned above, or your problem may be more complex than that. Putting up with the situation can be highly distressing for you at times. That is why it is essential to adapt money-management skills as soon as possible. You can opt-in for the advice discussed in this blog to meet your financial goals even after a 50% pay cut every month.