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Paychecks are something you depend on. Whether you’re living from paycheck to paycheck or allocating funds for retirement, you’re hoping you’ll never be faced with less pay. Pay cuts can happen without warning and you might not be in the best position to quit your job. If you are looking for an answer to your conundrum, know that many people face the same situation and there are ways of handling your pay cut without losing hope.

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Planning For That Day

Find out the time frame of the pay cut so you can schedule your finances around the reduction accordingly. No one wants to plan his or her finances around receiving less pay in the long-term, but it’s better than being unprepared. For one, save as much money as possible within reason before your pay cut. Also, if you have a particular skill set that applies, look for freelance jobs or take on additional projects on the side to try to make up for the income you’ll be missing.

Spouses who aren’t employed or have a part-time position should take the opportunity to pursue full-time employment. [1] For emergency expenses, there are options such as finance, which will help to alleviate monetary concerns during a time of crisis.

What’s the Scope of the Cuts?

You may be receiving benefits, and if this is the case, you need to understand how much you stand to lose. The second biggest cost for many companies is their health care benefits, and this may be one of the places they make an additional cut. Even if you’re told that you must pay more for your coverage, take it. It also wouldn’t hurt to ask if everyone at the company is taking a salary hit, either. If you discover that only your department is being asked to make a sacrifice, perhaps you might want to consider looking for a new job–though you shouldn’t make this knowledge public. [2]

Get Rid of Some Expenses

The last thing you want is to be making less money and still have large, outstanding debts. Look carefully at your expenses and avoid unnecessary interest accruing by paying off negative balances as quickly as possible and refrain from accumulating any new debt. The average family spends half of their budget on transportation and housing. If this best describes your household, cut these expenses in half and you’ll have 25 percent more of your income to distribute how you see fit. [1]

Don’t Beat Yourself Up

It’s hard to disassociate your self worth from the number on your paycheck, but you’ll have to try. Instead of considering yourself as a depreciating asset to the company, think of your position as an evolving one and your pay merely represents your skill set’s market value. This perspective helps to make the reduction in your pay less personal and helps remove some of the emotional pain involved. [3] When you move to a new job, you should be honest about receiving less pay and paint it in a realistic scenario so your future employer will understand. For instance, if your company was downsizing, it would make sense for you to take a pay cut. [2, 3]

Come Out on Top

If you are asked to endure a cut in your pay, negotiate a fair deal in which you can possibly receive additional time off. A reduction in pay should warrant less time spent on the job, though you shouldn’t expect your employer to pay you for this time. You may still not be making money from the deal, but you certainly will be earning valuable time to do other things instead. Of course, if you do work for a company going through pay cuts and you still work the same number of hours, they’ll remember your loyalty. [2]


You may be dealing with a great deal of stress during this time, but you may have more control over the situation than you may think. Time is one of the most important factors when negotiating and reevaluating your new pay. Lastly, you should never feel like your employer, no matter how willing they are to accommodate your needs, is cheating you.


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