It’s a scary world we are living in right now. It feels like everything is crazy, layoffs are increasing, and it feels a bit like Hunger Games.
Today, we’re talking all about what to do if your income drops.
Remember, hard times don’t last forever, even though it can feel that way in the, in the moment, but I just need you to remember that!
Here are 5 steps to help you get your stuff back on track and get you to a point where you don’t have to worry about this again in the future.
Step 1: Prioritize your mental health
I know that sounds like such a weird thing, but it’s easy to tie your self worth into your income. I experienced this as a business owner too, when my income’s really, really great, I felt confident. I felt good about myself. And sometimes when my income drops, I can feel it crap about myself. My confidence drops. I feel like an unproductive person in the world. I’ve seen it firsthand with myself and I do a lot of mindset work. So that’s why it’s so critical that you prioritize your mental health.
Take care of your health and make sure you’re:
- Drinking enough water
- Getting enough sleep
- Exercise consistently (or going for a run around your neighborhood)
- Watch what you eat
So it’s up to you to really maintain a positive, healthy habits.
Step 2: Create a bare bones budget
Anytime you have any income uncertainty or income loss, you really need to go back to this bare bones budget.
List out all of your expenses, what are the things that are truly essential and what are the things that are just niceties?
Little luxuries for me that would be eating out in coffee, nice to have, but not necessary, especially when you’re facing an income uncertainty.
Once you have all of your expenses listed out, rank your expenses from most important to least important. Things that have a higher ranking would be housing costs, groceries, utilities, gas in your car, car insurance, etc.
Step 3: Drastically reduce your expenses
This is a really tough thing to do because lifestyle creep sneaks in as our life progresses. We started to earn more money, starting living within our new means, and now it can feel almost impossible to reduce expenses.
Cutting down your expenses is really, really difficult because you actually have to take away some of the things that have become normal for you now.
When you’re losing income, you have to be strict with this stuff. You can’t continue spending how you normally did. It’s not going to work out very well.
Step 4: Prioritize side hustles that bring in IMMEDIATE income
I’m a huge fan of side hustling, but I know that not all some side hustles pay the same. Starting a business is great, but it can take years to build up your business income. When you are in crisis mode, you need immediate income.
Side hustles that I would recommend during this time are:
- Uber Eats
- Uber or Lyft
- Amazon Flex
- Or even seasonal/temp retail work
The side hustles listed above are great because you’re going to get money immediately. You can cash out that same day. And that’s what you need in a time of crisis is you need that immediate cashflow.
If you have a little bit of cash to invest, furniture flipping is a great side hustle. You can make money pretty quickly, but it does require you to put some money into product and inventory first and you don’t necessarily know how long that’s going to take to sell.
Step 5: Spend some time reflecting
One of the best things you can do when you’re experiencing income drops is really take some time to reflect and see, where did you go wrong?
What could you have done differently to make yourself less financially vulnerable in the future? Be careful not to allow you feelings control the conversation and lead to an unhealthy place. Separate the facts from your feelings.
Example of Fact vs Feelings
“I didn’t have enough money saved for this. I’m such a loser and I’ll never be good with money.”
FACT: I didn’t have enough money saved for this
FEELING (DRAMA): I’m such a loser and I’ll never be good with money.
I want you to take away the drama and just focus on the facts.
What could you have done differently to be in a better situation in a moment of need? Super critical to do when you’re facing any types of ups and downs in your life. Spend some time reflecting and start to put together a plan that sets you up for success in the future. That’s one of the best things that you can do for yourself.
I promise you, if you follow these exact steps, you will be in a much better financial situation. I hope this help and leave a comment below.
Cheering you on,