What should you do if your income drops sharply?

The feelings and emotions we are experiencing during this period have already been very intense for many people, and what is still to come is (still) uncertain. But what if you lost your job? Do you have job security? Do you have income security? Do you still have clients as a self-employed person? And another important question: can you keep serving your clients in all circumstances?

How will you be able to absorb a sudden drop in your income from work (or your income from financial or real estate investments) in your monthly budget? Have you built up a savings pot or a savings buffer to arm yourself against these shocks? Can your wealth take a knock, or would you have a serious problem if tomorrow you fell back to, say, 70% of your last salary? Or if your tenant suddenly can no longer pay you their rent, would you run into trouble yourself?

To start with, here are 10 tips for avoiding financial stress in a difficult period:

• First you need to find out where you stand with your money. Make a list of everything you own, everything you owe, and everything you earn and spend each month. This is your starting point and the way to discover what shape you are in financially.

• Make sure you have a savings buffer. If you don’t have one yet and you are still working, try to build one up as soon as possible. Ultimately, try to save the equivalent of 3-6 months’ net salary in your savings buffer.

• Find out what you may be entitled to in your situation and make use of the measures that are genuinely useful for your situation. Don’t accept every “offer” without first checking what the “conditions” or “repayment terms” are. Gifts are rarely handed out; more often it is a stay of execution.

• Perhaps you don’t have any financial problems, but you are in the red on a credit card. Interest on financial products like these is sky-high and costs you a small fortune every month. Always pay off your credit card spending at the end of each period instead of opting for a partial repayment. Often the monthly payments barely cover the interest, and so you stay tied to this bad debt.
• Enjoy saving money! First make an overview of all your expenses and income, in other words draw up a household budget, and take a close look at everything you spend. Use your bank statements, energy bills, memberships and subscriptions for this. Can you cut things out, or is there a better deal? A quick search for comparable products and services will show you what other providers offer. If it is a better deal, see whether your existing provider can match it, or switch to save money!

• Go for a financial detox by taking a critical look at your spending and avoiding unnecessary expenses. By now you are simply used to not going to cafés or restaurants. Shopping has also become less of a matter of course. All of these are opportunities to handle this more consciously in the future. If it is hard to say no to the many temptations you come across online, make sure you avoid the triggers as much as possible. You can unsubscribe from marketing emails, usually via the link at the bottom of the email. Protect your computer with a spam filter and antivirus software. Perhaps the best tip of all is to create an extra email address that you can enter everywhere for competitions, free memberships, etc.

• Eat better for less by preparing your own food. You are being encouraged to support local businesses and order takeaway meals. In principle that is a lovely idea, but not if it comes at the expense of your financial well-being. Keep takeaway as a treat and cook as much as possible yourself instead. If necessary, with the help of meal kits from the supermarket or trial packages from Hello Fresh or Marley Spoon that let you try a box for free. Healthy, tasty and convenient food without spending a lot of money on it.

• Finally get round to clearing out your garage, and then, if you like, the rest of your house, step by step. Look at which items can go, take photos of them and sell them through a second-hand website. This kills two birds with one stone: not only do you declutter your home (and your mind too!), you can also earn something from it. If you have children of the right age, involve them and let them handle the sale in exchange for (part of) the proceeds. Or have them clear out their own things as well. A good example inspires others to follow!

• What could you still do, and what would you like to do, to earn an additional income? An extra income to pay your daily costs with. And then perhaps an extra little savings pot to do something nice or to really build towards your financial goals. An extra income to realise your dreams faster. Pay enough attention here to your “work-life balance”, to make sure your well-being doesn’t suffer because of the new tasks you take on. Choose a job or assignment that is in line with what you enjoy doing and from which you can draw pleasure and energy.

• Time to invest in yourself. Buy that one book or borrow it from the library, take that online training course (many of them are free) or invest in a course of study. Explore what your qualities and talents are and what you truly want in your job and in your life. Consider calling on a coach to help you with this. You are often entitled to free career guidance. Have a look at the website of the public employment service in your country for this. The Financial Well-Being Academy now also offers career guidance in collaboration with the renowned K-onsult. Together we build your career, the engine of your wealth and financial self-confidence. You can find more information at loopbaanbegeleidingaanvragen.

Would you like to bring about change in your situation?

Then get in touch, without obligation, with one of our team members via this link. Or simply send us a message by email (info@financialwellbeingacademy.com). We treat every message in confidence and put you directly in touch with someone who can answer your questions or help you further. You can also always visit the Het Financieel Huis website, where you can, as it were, use our own “Google search module” for your wealth to look for a person or organisation with the right competences and accreditations who can guide you and help you further in carrying out your plans and the projects you have set yourself. Click here to find your adviser.