If you’re living paycheck-to-paycheck or have an inconsistent income, you may experience times when your income is lower than expected. This can also happen if there’s a lull in your income like a leave-of-absence or a layoff.
How do you manage your money when you barely have enough to get through to your next paycheck? It can be challenging for sure.
First, there are some things you can do to set yourself up for success to avoid this situation altogether.
Know the minimum amount you need to get by – You may be able to cut back on your grocery spending for a short time, cancel some services and subscriptions you don’t really need, and delay a few payments. But what about those things that need to get paid on time like your mortgage, car payment, insurance, and electric bill. Knowing how much you absolutely need through the month is important.
Work with a budget – If you’re living with an inconsistent income, having a budget can help you get through the lean times. You can plan accordingly for upcoming bills when the income is plentiful so that you can get through the tough times when it’s not.
Save – This is especially important if you know in advance that you’ll have some months when your income is lower than expected. Try to build your savings to at least the equivalent to one month’s income. This way, if you have a lower income than expected one month, you’ll have the funds to help you get through.
But what if the lull in income was unexpected and you didn’t save or budget for it in advance? What are your options for making ends meet?
Advance in pay – Ask your boss or HR department for an advance on your next paycheck. Many companies offer this option to help their employees through a difficult time. Keep in mind two things though . . . first, this is a limited time option, you can’t get it every month or even several times a year. And second, you will ultimately pay for this later when your next paycheck is far less than usual.
Credit card – At the very least, you can pay your utility bills and buy groceries with your credit card. You may also be able to receive a cash advance on your card to pay other bills like your rent or mortgage. You will incur a higher interest rate on a cash advance and it will raise your credit card balance so you’ll need to budget for how to pay it off in future months.
Get a loan – You may be able to receive a personal loan from a variety of lenders including online lenders. Simply enter your credit information to apply. If approved, you’ll have an installment loan that you can pay off a little at a time. You will need to have a good credit score and make sure you read all the fine print about interest rates and prepayment penalties.
If at all possible, it’s best to plan for months when your income may be lower. But if you’re caught by surprise, there are some options that can help you bridge the gap until you receive your income.