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April 20, 2020

Pay Cuts: 10 Ways to Save Money When Your Income Drops


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The global pandemic has been wreaking financial havoc on families across the US. People are losing their jobs, getting furloughed or taking pay cuts. With no guaranteed end in sight, this can be a frightening time for a lot of people across our country.

Our family has seen pay cuts recently as well. Like a lot of other families, we're looking for ways to save more money so we can survive this Coronavirus season and protect our family.

Some areas of saving have been immediate. With the quarantine order keeping us inside, a lot of us are probably spending less on fuel, oil changes, gym memberships, and daycare. Even with these decreases, it’s important to look for other ways to save as well. 

Here are 10 ways to save money when you’re facing job loss, furloughs or pay cuts. 

1. Save on Credit Card Bills

When you lose your job or experience pay cuts, a great place to save is with any high-interest credit card debt you may have. A lot of credit card providers are offering programs to help during this difficult time. 

Call your provider and describe your situation. You may be able to defer payments or reduce your current interest rate. During this global pandemic season, you may have to wait on hold longer than normal, but your patience will definitely pay off. 

2. Reduce Auto Insurance Payments

A monthly or semi-annual payment that can eat up a lot of your disposable income is your auto insurance. Check-in with your auto insurance provider, describe your situation and let them know you’re not driving that much because of the quarantine anyway!

My auto insurance provider, Progressive, is offering a 20% discount during the quarantine period of April and May because people aren’t driving as much. That might not seem like a lot, but every little bit helps when your pay is cut.

3. Change Cell Phone Plans

No, don’t get rid of your cell phone. You’re going to need it right now. But do consider switching up your plan. 

Nicole and I switched to a pre-paid or MVNO cell phone plan last year and it saved us about $30 per month. This is a great way to save money on these larger monthly bills. 

You do have to have a “paid for” cell phone to do the pre-paid monthly plan so this may not work if you’re still making monthly payments. Either way, call up your provider and see what they can do for you. For them, some money is better than no money. 

4. Shop at Lower Cost Grocery Stores

Nicole and I have been fans of Aldi for a few years now. When we switched from Kroger to Aldi, we saved around $300 per month on average. That netted us an extra $3,600 per year

When you’re out of work or losing income, another $3,600 per year could mean a whole lot! Consider trying out a new lower-cost grocery store like Aldi and see if it makes a difference for your wallet during this tough time. 

While you’re at it, shop with a list so you’re not buying more than you actually need. It can be tempting to overbuy when your typical items aren’t in stock, but try to resist the temptation. 

5. Put Retirement Savings on Pause

If you’ve been saving for retirement through an IRA, it may be time to stop for the time being. It’s important to plan for tomorrow, but you want to make sure you can afford today first. 

Having more money immediately available in a savings account will probably feel more comfortable during a time like this. Typically, our family feels comfortable with 3-6 months of expenses saved in our emergency fund. With this Coronavirus madness, we’re aiming for 12 months of expenses saved. Everyone is different … do what feels right for you.  

6. Cut Cable TV

You may have been heading this way already, but cable TV can be expensive and unnecessary when you’re on the hunt for new sources of income. Besides Netflix rocks and it’s a fraction of the price. 

Talk with your cable TV provider to see if you can suspend your service for the time being during your unemployment. They may have programs set up to support you during this time. Or if you’re ready to cut the cord, go for it. You may soon realize that you don’t even miss it. 

7. Do a “No Spend Challenge”

Saving money isn’t inherently fun for a lot of people, but challenges can be! 

Try making a game out of your reduction in spending by participating in a “no spend challenge”. These types of challenges encourage you to reduce or eliminate all unnecessary spending for a period of time. This could be for a week, a month or maybe until you’re back on your feet with steady employment. 

A friend of mine, Jen Smith, used this method to help her pay off $78,000 of debt. If it can work for her, it could work for you. 

8. Eliminate Home-Based Services You Can Do Yourself

If you previously paid for a cleaning service, lawn maintenance or snow removal, it’s time to cancel those services immediately. If you’re physically able to, this is work you can do yourself to save money. 

Let your trusted service providers know your financial situation and tell them you hope to hire them back soon. With a little luck, you’ll be back to work and you’ll need their support more than ever. 

9. Ask for a Home Energy Audit

When Nicole and I were looking to save money after she went to full-time Stay-at-Home Mom, we requested a home energy audit from our energy provider. This simple call helped us receive 30 free LED light bulbs and we discovered areas in our home where we were losing unnecessary energy.

Contact your home energy provider and ask for a free audit. If they don’t provide the audit, ask for other ways you can save on your monthly bill given your situation. You may be able to defer payments or receive a reduced bill just for the phone call. 

10. Go Down to One Vehicle

A good friend of mine bikes to work every day. This may seem crazy to some, but this choice has allowed him and his wife to reduce their monthly expenses and it’s improved his health. 

If you are a two-car family, ask yourself if you could go with one vehicle for the time being. Selling your car could help your family get through some tough times and reduce your overall stress level during this quarantine season.

Others Ways to Save Money With Pay Cuts

If you are out of work, don’t forget to apply for unemployment so you have some money coming in to support you during these tough times. 

Additionally, the government has been sending out stimulus checks to help as well. If you’re unemployed, use this money to help with your housing, bills and food. Normally, I’d add transportation into this mix, but not a lot of us are traveling right now!

I’m hopeful we’ll be back to normal soon. The extra work from these 10 ideas will go miles in ensuring your family's safety. 

So let’s get to work.

Have you had a pay cut during the quarantine season?

What are doing to save money during this time?

Please let us know in the comments below.



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Andy Hill

Andy Hill, AFC® is the award-winning family finance coach behind Marriage Kids and Money - a platform dedicated to helping families build wealth and happiness. With millions of podcast downloads and video views, Andy’s message of family financial empowerment has resonated with listeners, readers and viewers across the world. When he's not "talking money", Andy enjoys being a Soccer Dad, singing karaoke with his wife and relaxing on his hammock.


  • I would caution against cutting so much that you can’t focus on getting the income back up again. I knew of a laid off professional who immediately cut back on daycare hours, which of course saved a lot of money, but then she struggled to get coverage for interviews and networking meetings. During shelter-in-place that specific tradeoff is less relevant but I do see people (and I have been guilt of this myself) focusing too much on cost-cutting over increasing income. Ideally you do both.

    • It’s a great point, Caroline. There are limits to spending less (where it can actually hurt you). But if people have no money coming in because of the present economy, we can spend what we don’t have.

  • Some great ideas on how to save money during these times Andy, I actually just change cell phone providers and cut my bill in more than half. I like the idea of an energy audit, I am going to dig into that a little deeper this weekend. Thanks for your ideas and keep up the good work.


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