Can you live on less? Many people don’t think about this question until they have to, well, live on less. At this time of panic and disappointment, many compromises may appear to be unmanageable and too much to accept.
In reality, people’s spending stretches along with their growing budgets. Remember, several years ago when you made two thirds of your current salary and still lived a fine life? The extra money does not just cover the cost of inflation. It also probably has gone into your nicer car payment, house payment, club membership and various lifestyle upgrades.
If you’re serious about setting a plan — contingency plan — just in case you’re forced to live on less money because of job loss or an emergency that drains your budget, you should look closely at your current spending and know which expenses can be trimmed.
Having a plan can also help you reduce your stress level when an emergency strikes. Here are a few points to consider.
Skinny budget
There is nothing wrong with treating yourself to nice items every now and then, but do recognise that these treats can be lived without. For example, have you got in the habit of eating out several times a week? Have you been shopping without a list, and ending up paying much more than you had expected? Do you pick top-brands in everything from groceries to clothes and electronics?
A reality check can easily reveal that these are costly habits and, while you may have settled into them, a modification won’t really ruin your lifestyle — while it will certainly save you a good amount of money everything. Similarly, a little bit of budgeting for essential purchases can even help you bare down your spending.
To plan, look at the details of your spending and see the absolute minimal budget that can support a decent lifestyle in case of an emergency. This number can be an eye opener and source of relief.
Big slashes
If you need to reduce your expenses significantly, the biggest impact can come from slashing big expenses. For example, if a spouse has lost a job, pick a couple of major cuts to do immediately to reduce the financial stress and avoid debt.
For example, if you’re able to downsize or move to a less expensive neighbourhood, you may be able to save thousands of dirhams. Think of your car payments and leases, can you and family live with fewer cars or use public transportation? This might not be a popular decision, but again, it will save you immediately a good amount of money.
Make instant money
Think of ways that will help you make quick money. Selling an expensive item could be a good idea. Cancelling a trip that was planned is another way to ensure you are not spending beyond your income.
You also could participate in studies or tests. Many research organisations will pay for your time and input. Although this won’t make you a living wage, and may seem to conflict with your job search or other actions that you have to take to deal with your emergency, it could help you cover a bill or two.
If you foresee several months without income, think of options for making regular money. Can you offer a particular service to your friends and contacts? Look for part-time jobs that could be enjoyable and manageable in your circumstances even if they are not the types of jobs you want to stick with in the long run.
Although some of these options may be time-sensitive and can’t be researched until you actually need them, knowing your options can be helpful and it will save you time and stress when you are handling a bigger crisis.
The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.
Plan ahead for reduced budget
• Know your minimal requirements
• Move quickly with big cuts to avoid debt
• Find sources of income — sporadic or regular
• R.O.
