Receiving a pay cut can come as a big shock. After all, employees expect their income to go up over time through raises and promotions, not down. Experiencing an unexpected reduction in pay, benefits, or hours can cause significant financial strain.
My partner’s bonus payments were recently lowered, which will cause us to lose several thousand dollars worth of income this year. However, we’re trying to find the silver linings in this situation and focus on solutions. Here are 3 actions you can take to financially recover from a pay cut.
3 Actions to Take After Receiving a Pay Cut
Gather Information
When your employer reduces your hours or pay, you may worry about your job security, which is a valid concern. Companies in seasonal industries like construction may experience slowdowns during certain times of the year, which could explain why your pay or hours were reduced.
However, scheduling changes and salary cuts can be a sign of deeper financial trouble. Sometimes businesses will dock pay in an attempt to prevent layoffs. But if this strategy fails, employees may end up losing their jobs in the future anyway.
See if you can find out more details about why the pay cuts are happening to help you evaluate the situation. Ask if the salary reduction is permanent or if there’s a chance that your full wages could be restored in the future. Make sure that this is the only planned schedule change or salary reduction. If other benefit cuts are in the works, it may be a sign that it’s time to look for new opportunities.
Try to Negotiate
If everyone’s salaries or hours are getting cut across the board, there may not be much room to negotiate. However, it’s worth asking your boss if any concessions can be made. If you’re a salaried employee, you may ask to work fewer hours or receive extra vacation time to balance out the difference in pay. Or maybe you could work from home a few days per week to reduce your commuting costs. Negotiating benefits that soften the blow of the pay cut could help you recover financially and feel more positive about the situation.
Another negotiation strategy that my partner is planning to try is asking for a raise at the next annual performance review. Although your company may need to reduce costs now, the situation could look different in a few months or a year, so it’s worth following up.
When asking for a raise, don’t focus on the pay cut you received. Explain why you should receive a raise based solely on your performance. My partner has taken on more responsibilities and accounts this year, which we believe warrants a salary bump.
If you choose to stay on at the company, continue to perform your job to the best of your abilities despite the pay cut. Maintaining a good attitude and work ethic will show that you’re a reliable employee who deserves a merit increase.
Focus on Solutions and Silver Linings
Receiving a pay cut can be discouraging. Doing the same work for less pay may feel like you’re taking a step backwards in your career and finances. However, it’s important to focus on the positives. My partner and I are grateful that this was just a pay cut and not a layoff. We’re also lucky that we don’t rely on bonuses to pay our bills and can absorb this loss of income.
Find a Side Hustle
Maintaining a positive attitude will help you focus on finding solutions that work for you. If you want to stay with your company, you could try to replace the lost income with a side hustle. If you’ve always dreamed of starting a craft business or becoming a freelance writer, now is the time to try it!
Reduce Expenses
Reducing your expenses and cutting down on luxuries like eating out can also help you financially recover from the pay cut. Although it’s hard to eliminate extras, remind yourself that this is temporary. Once you figure out a way to increase your income, you’ll be able to reintroduce some fun spending. Plus, you’ll appreciate treats like Netflix more because you had to give them up for a while.
Look for New Opportunities
Your pay cut may also spur you to look for a new role. Although job hunting can be difficult, try to view this as an opportunity to find a workplace that’s a better fit for you. Maybe switching jobs will finally allow you to work from home or get that promotion you’ve been wanting. If your industry is declining and it’s hard to find an equivalent role, this could be your chance to make a career change.
Wrapping Up
Speaking from experience, receiving a pay cut can make you feel a bit powerless and hopeless. But you’re not stuck! You can turn this situation around by taking positive action. Whether you decide to reduce your expenses, pick up a side hustle, or look for a new job, trust that everything will work out and you’ll financially recover.
Have you ever lost income or received a pay cut unexpectedly? How did you cope financially and emotionally? Share your tips in the comments!
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Image and article originally from www.savingadvice.com. Read the original article here.