Kimberly Palmer: How to bounce back when your income drops

Losing income is never easy, but it’s become increasingly common over the last year and a half: According to the Pew Research Center, 44 percent of U.S. adults say their household has experienced either job loss (including temporarily) or a pay cut since the beginning of the pandemic, with Hispanic and Asian adults most likely to say so.

That creates an incredible strain as people scramble to cover basic expenses like food and housing as well as monthly bills and everyday expenses, even if the reduction in income is temporary. Having a sense of your budget and avoiding procrastination is the key to doing well post-pay cut, says certified financial planner Manisha Thakor, founder of MoneyZen, a financial educational consultancy in Portland, Oregon.

She says your odds of surviving and perhaps thriving go up exponentially “if you know your expenses beforehand, immediately acknowledge something bad has happened and you need to adjust them — and open your mind to the notion that it’s really likely that by downsizing, you could actually end up having a richer life.”

ACKNOWLEDGE THE EMOTIONS

“It’s OK to admit that it’s a crappy situation and you are going through it. I think a lot of people don’t give themselves that grace,” says Athena Valentine Lent, founder of the Money Smart Latina website.

There can be grief involved in losing income as you mourn your previous lifestyle, says Daisy Luther , founder of The Frugalite website. “I grew up in a well-to-do-family and never heard, ‘We can’t afford that,’ and then got divorced and I had to accept that my life had changed,” she says. She could no longer go out to pizza with her kids every Friday night, for example. Gym memberships and nail salon visits were out, too. She suggests giving yourself a set amount of time to feel sad...