Managing Finances Between Jobs (1274)

When you’re faced with a reduced income, you’ll need to cut back on expenses and develop a spending plan to help you pay your bills. If your income is reduced for more than a month, adjust your spending habits to keep control of your finances.

Begin by listing your current total family income from all sources. Include unemployment compensation as well as income from other family members if you use it for family expenses. Use the take-home amount, as this is what you actually have to spend after deductions.

Next, figure out how much you spend on all categories of household living expenses. Be sure to include periodic expenses like insurance premiums and family gifts. As you think about what you spend, ask yourself these questions:

- Which expenses are essential to your family’s well-being?

- What are your highest priority expenses?

- What areas can you cut back on to keep your spending within your income?

- How much can you afford to spend in each category?

Compare your expenses to your total income. What can you do if your expenses are greater than your income? Here are a few suggestions:

- Cut back on spending. Identify discretionary expenses that can be eliminated.

- Increase your income. You may want to look for part-time or temporary work to help supplement your income while you are unemployed.

- Look at your other assets. What savings, investments or property do you have that you could use or convert to cash to meet expenses. Keep in mind that borrowing and using savings are only temporary solutions.

- Reduce your fixed expenses. If too much of your income is going to fixed expenses, such as housing or debt payments, there may not be enough money left to cover your other living expenses. You may need to refinance your loans, move to lower-cost housing, or suurrender the property to your creditor to get out from under some of your debt.

Once you have a spending plan that sets spending amounts for essential family needs and balances your spending with your income, stick to it. Writing it down is not enough. You must use the plan to guide your spending. Keep track of what you spend to be sure you don't exceed the spending amounts you set in your spending plan.

Living on a reduced income may be temporary or prolonged. Getting the most from your income during this time requires careful planning and wise spending decisions.

For more information on this subject, Please visit the College of Agricultural Sciences Publications Web site.

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