How to Cope With Sudden Loss of Income

It can be a shock to suddenly go from having a stable income to being deprived of it. Countless individuals have had to suffer from an unexpected drop in their finances, and it’s never a pleasant experience.

You can do certain things to help mediate the effect this has on your life and get back to a place of stability. A sudden lack of income can be because of various factors, from an accident to retrenchment. A recent post by Diamond & Diamond explains the benefits you have as a non-earner.

Take a Breath

You need to have a good grasp of your finances and have strategies to avoid falling into a similar situation in the future. It’ll give you some confidence when approaching the problem and lets you deal with it to your best ability.

Initial Reaction

It’s essential to act quickly and rationally when you first experience this drop in income. For many of us, our first reaction is panic. It’s perfectly understandable, and you should allow yourself a brief moment to experience the stress of the moment.

Once your initial shock has worn off, it’s a good idea to step away from the problem and look at it from an outside perspective. Doing this will give you a sober view of what you’re left with, which will form part of your plan moving forward. Making rash decisions won’t help in the long run, and working out what your next move should be will help ground you in the here and now.

Have a Plan

This is where you can truly make a difference as to the outcome of your predicament. You need to set out a step by step plan that will limit the impact of your income loss. It’s also a good idea to set up a backup plan in case this happens again.

Make a Budget and Stick to It

If you’ve never dealt with having a budget, now’s the time to learn. A set amount will allow you to see where the money is going and how to keep expenses to a minimum. If you spend money without a set budget, it’s easy for it to get lost on small, impulse purchases.

Prioritize What You Need to Pay

Ensure that you know which bills need paying and that you set aside that amount specifically for them. You need to pay certain accounts straight away, but you might be able to work out a reduced rate for others. Some companies will give you the option to pay less on your bills for a few months if you let them know that your income has been affected.

Cut All Your Unnecessary Expenses

We all love the occasional take out coffee, but those dollars add up. If your income dwindles, you’ll need to accept that there’ll be a change in your lifestyle. You should keep track of the money you spend on luxuries and decide if they really need to be part of your monthly purchase.

The Takeaway

Take it one day at a time. Don’t get discouraged and keep your head high. Once you’re able to get through this challenging time in your life, you’ll come out the other end more robust and more resilient than ever before.