What Being Furloughed Taught Me About Money Management


If there’s anything this year has taught me, it’s that life changes with no warning, no matter how prepared you seem to be. Due to COVID-19, many companies have had to struggle with the possibility of reducing hours or letting go of employees altogether, contributing to the 17.8 million workers who are currently unemployed or facing some type of job loss, as the Bureau of Labor Statistics reported in June. I was no exception, joining the millions of workers affected by the COVID-19 pandemic and was furloughed, as my work schedule was cut almost in half—along with my pay—for the unforeseeable future. 

There’s nothing worse than the feeling of being financially unstable. All of the budgeting apps, Excel spreadsheets, and cash envelope systems don’t prepare you for a reduction in pay and the uncertainty it brings. This time has taught me a lot about managing my money better and more efficiently: focusing on savings, determining what spending is essential and what is not, planning my spending on a monthly and bi-weekly basis, and making my money work harder and better for me. Here’s what I’ve learned about managing my money in the midst of a crisis. 


There’s no such thing as guaranteed income 

Even with a salaried job, an hourly job with benefits, or a job in an industry that seems to out-weather the storm of COVID-19, no job is completely safe from potential pay cuts, reductions in hours, or even layoffs. If there’s anything this unstable economy has taught us, it’s that the unexpected can happen to anyone, and on any given day, your income can be impacted. 

It’s hard to predict when to expect a blow to your income, but when budgeting during uncertain times, make sure to prepare yourself for any changes as much as possible

  • Build up a heftier emergency savings fund to cushion yourself just in case an unexpected change in pay or employment might be coming
  • Pay your bills a month or two ahead if possible to get ahead of any possible impact to your income 
  • Track your daily spending closely to monitor how you are using your income and make room for any adjustments or cost savings 

Have a plan to adjust your spending sooner rather than later, just in case your pay is impacted by the economy.


Your budget should—and will—change  

Budgets are made to be adjusted based on major life changes, and when dealing with a pay cut or a reduction in hours, you will be challenged to be more flexible with your spending. Budgeting is a helpful practice to guide your spending so that you’re not living paycheck-to-paycheck. Your budget should also help you identify where you can cut costs and save even more, especially when facing a lapse in pay. This is important when changes to your income are looming, and a properly planned budget will help you get ahead of the impact to your spending. 

Recreate your budget centered on your essentials first, prioritizing your fixed bills, savings, and debt payment, then your non-essentials like entertainment, shopping, and dining. Plan your future budget as soon as you experience a change in income or employment based on a smaller income, whether you expect to gain your hours or pay back or not. Don’t be afraid to adjust your budget on a monthly, bi-weekly, or even weekly basis to reflect the change to your income and spending. 

Always make room for unexpected changes to your budget based on your income by continuing to curb your spending and prioritize essentials, and be well equipped for when major life changes happen. 


There are always ways to save more money

If you’re a penny pincher, couponer, avid saver, or are used to the zero-based budgeting approach, you know that there are always ways to save money when on a tight budget. If your budget has to adjust due to pay cuts, this is a great time to find ways to reduce your expenses and seek relief options by looking for ways to save on essentials. 

After tracking your expenses closely and making modifications where you can, find out how you can save even more on your day-to-day bills: 


  • Look into consolidating or refinancing your debt if needed to receive a lower interest rate or monthly payment, and to help track your expenses easier with just one payment to worry about. Contact your lenders to consider your options in order to lower your payments while working off of a tighter, fixed budget.
  • Many lenders, utility companies, cell phone servicers, and even credit card companies tend to have special promotions and offers that aren’t typically advertised, especially to long-standing customers who put their bills on autopay and never question the fees. Contact your servicer to see if they can look into your account and see where you might be overpaying or if there are current offers that could be applied to help you save even more. You’ll be surprised how much you can save on your essentials by just simply asking for discounts.
  • If you are having a hard time making payments after adjusting your budget and cutting costs where you can, don’t be shy to call and ask your servicers about any payment plans or forbearance options that might be available to you, especially if you are a loyal and longtime customer. During these times, many companies are willing to work with their customers on the best options to help them continue their service in lewd of losing a faithful customer. 


It’s OK to use your savings 

For those of us who are used to saving rigorously and love to see the numbers in your bank account go up and up, it can be hard to part with that money you worked so hard to save up. If you are facing a cut in hours and/or pay during this time, don’t be afraid or ashamed to use your savings to supplement the loss in wages. Your savings are there to help you in times like these, where you might need a few extra dollars to help cover your essentials. After monitoring your expenses and cutting costs where you can, determine where your savings can help you during this time, and once you are able to work your regular full schedule or earn some extra income, up your savings and make sure to pay yourself back. 

If you saved for a rainy day, don’t be afraid to use it when needed. You saved an emergency fund for a reason, and if you are strapped for funds due to a cut in pay, don’t feel bad about having to use your savings—that’s what it’s there for. 


Your dollar amount does not determine your worth  

It can be easy to get caught up in the uncertainty of how your income and budget will change from week-to-week, leaving you feeling insecure about your finances, having to turn down or change plans months in the making. It’s hard to prepare for a cut in pay, but making the most out of your life should not be determined by how much money you make. There are always ways to cut costs, save more, and enjoy life on a smaller budget. 

Don’t let your funds dictate your plans. Make the most out of a smaller budget by postponing or downsizing vacations to stay-cations or road trips close to home, becoming your own hair stylist or nail tech at home, or having friends and family over for get-togethers potluck-style vs. going out to eat and drink. This is a great time to find ways to cut unnecessary spending and pull in family and friends to help too. 


I now know that my finances will experience the best of times and the worst of times. Managing my money to weather the storms of life’s sudden changes is a hard, but necessary lesson I learned during these times, and when payday comes—or doesn’t—I’m prepared to make my money work harder for me. 


How has your income changed recently, and what have you learned about your budget and finances?