Did you suffer a cut to your income in the past twelve months?

I have not had many spells of employment over my working life. However, one of them was a commission renumeration, where I was paid a percentage of the revenue I generated. There was no ceiling on my income - but the floor was zero! One payday the amount I got was 30% less than I was expecting. When I queried it with the manager, he tried to explain to me that ‘Head Office’ had reduced my commission out of necessity – their profit had fallen.


A 30% cut in pay is hard, extremely hard, particularly if you are, as I was then in a tight financial situation. The company just ignored my employment agreement and cut my pay by 30%. Coming from “The School of Hard Knocks” there was only one course of action, and I took it. I left and started my own business in the same industry.


Inflation has now reared its ugly head again, so we get less for our money today than we did a year ago. If we spend all we earn - then high inflation is as bad as a pay cut. At best we have less money to save or invest, or at worst we must cut back on living expenses and/or incur debt. As they head into winter with much higher energy prices some Europeans have to decide whether they will “Eat or Heat”.


We have no control over the causes of inflation, but we can cushion its effects by building adequate reserves, reducing unnecessary spending, and looking to increase our income.


Everything moves in cycles, and often the best time to take action to manage money better is when things appear grim, so that we can take advantage of the upturn when it comes.


Having an effective money management system helps to ensure that money is put away in the good times to help us through the not so good times. While setting up our system:


  • We can look for ways to increase our income – increase prices, get a better job.
  • Ask what money are we wasting? Media subscriptions, too many takeaways and so on.    


How much should we aspire to have in reserve? A minimum of 3 months payments, but preferably 6 months, in reserve should weather most storms while we reorganise our business and finances to deal with a changed environment.


It is always useful to turn a crisis into an opportunity.

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