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7 useful budgeting tips after a paycut or retrenchment

Having your pay cut or being retrenched isn’t the end of the world. Even amidst the bad news, we also read inspiring headlines of ex-pilots who are now hawkers, trying another way to make a living. We think that is awesome. There should be no shame in that.

If you find yourself in a similar position where your pay has been cut significantly, or you’re retrenched, one of the first things to do might be to scale down your lifestyle.

Contents:

  1. Refinance your mortgage
  2. Downsize your house
  3. Declutter your home
  4. Sell your car
  5. Cut down on dining out
  6. Drop enrichment courses or tuition classes
  7. Let go of your domestic helper
  8. Further consolidate and look at your recurring expenses
     

Here are the best things to do after a paycut or retrenchment

1. Refinance your mortgage

Your mortgage could set you back by thousands a month. With the help of low interest rates, you could potentially bring this sum down significantly. Get in touch with a mortgage specialist who can advise you on how to refinance at the lowest fees to a low interest rate mortgage loan on the market.

2. Downsize your house

When you were at the peak of your career, you might have bought a swanky property – be it a large condominium or a bungalow. If you’re struggling to make mortgage payments, why not think about moving to a smaller property, or even to somewhere that is less central?

The good news is that the property market is one of the more resilient ones even in the Covid-19 era, and you’ll find that you won’t be losing a lot of money if you choose to sell your house and downsize to a smaller one.

3. Declutter your home

But before downsizing to a smaller property, you might want to look at all that you have accumulated with your hard-earned money over the years and see where you can pare down. Carousell is a great platform for letting go of books, electronics, clothes, furniture, whatever and anything that you don’t really need.

You could get tidy sums of cash from there and if you choose to downsize, it’ll be an easier process. We hear (from Marie Kondo, of course), that it will clear your head too. The benefits could be life-changing.

4. Sell your car

Next, for those who are paying hundreds a month to finance a car loan, letting go of the car could be hitting where it hurts most. You will free up a large part of your budget that goes into petrol, parking, ERP, road tax, car insurance, et cetera.

If you really still enjoy the convenience of a car, downsize, or try to save money on your car insurance premiums by comparing what’s on the market.

Also read: How to sell your car in Singapore

5. Cut down on dining out

Yes, we all love a good scrumptious meal cooked by professional chefs in a relaxing ambience. But we can also agree that now with Covid-19 restrictions, it just isn’t the same.

Learning to adjust to a lighter palate by cooking simple dishes at home could help you save a few hundred bucks a month, and is healthy, too.

Let’s say you used to blow $150 too $200 a dinner treating your family to a Haidilao feast each weekend. You’ll find that if bought the ingredients for a steamboat at home, you would have spent perhaps a third of the cost. Over the period of a few months to years, that adds up to a lot of money. 

6. Drop enrichment courses or tuition classes

Those with children, don’t feel ashamed to communicate with your spouse or children that your finances are tight and you need their help, as your family, to share the burden.

Your children need not go out and get part-time jobs (for now, hopefully), but you could have an open conversation with them about their enrichment courses or tuition classes. Do they really need them? Is there a class that you’ve been paying for but your child is not getting any value out of?

Paring down on extra-curricular classes can save you another considerable sum every month.

7. Let go of your domestic helper

Have you had a domestic helper for sometime? Challenge the comfort of having someone clean and cook. Talk to your family openly about this.

A domestic helper could be useful at a time when the children are young or you have elderly parents and need an extra pair of hands. But when your children get to primary school age, they could easily do the simple chores: folding clothes, vacuuming and washing dishes are some examples.

It may be uncomfortable at the beginning, but when everyone establishes new routines and habits, doing the weekly chores together could be a bonding activity that also teaches responsibility and independence.

Further consolidate and look at your recurring expenses

Doing the above could already save you thousands. Going beyond, you may want to scrutinise what you always pay every month through credit card and GIRO. These expenses tend to be out of sight, out of mind, so go through your bills and see what you have really been paying.

Draw up a list, ask yourself if you’ve really need it, and terminate or find alternatives. Such expenses could be:

  • Entertainment subscriptions: Netflix, Spotify premium, etc.
  • News subscriptions: Straits Times, The Economist, other magazines, etc.
  • Telco bill (Consider switching to a lower cost SIM Only plan)
  • Electricity bill (Consider switching to an electricity retailer)
  • Country club membership
  • Any other membership that you’ve been paying for

These austerity measures can help you make your savings last longer so you can get out of panic mode, breathe, and think about whether you need a mid-career switch, or a side hustle to boost your income.

Good luck, and all the best.

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