How to Handle Furloughs and Temporary Income Reductions

by Reader Contributors

Money can get tight when your employer makes you take unpaid furlough days. Our savvy frugal readers share tips for handling and preparing for furloughs and temporary income reductions.

Dear Dollar Stretcher,
As part of our contract negotiations, the union agreed to a furlough day with the other options having been worse. There won’t be raises of any type, but with the furlough day, there also won’t be additional pay cuts. I haven’t finished planning for this as the date of the furlough day is still to be determined (and therefore the month in which the pay reduction will occur), but I will be putting extra money in savings to be ready when it comes. How have other readers dealt with such temporary reductions in pay?
K.

How Did You Handle a Furlough or Other Temporary Income Reduction?

We sent this question out to our readers. Many of them offered some very helpful advice. If you are facing a pay cut, these tips can help you prepare and make it through until your income is restored or you find additional income.

Tighten the Belt

Some general belt-tightening should help. Eliminate things you really don’t need to survive, like cable TV. Switch to a lower phone plan and talk less. Limit your groceries to the basics like meat, grains, fruit, vegetables, and dairy. Cut out the extra snacks that just lead to weight gain anyway. Try taking public transportation at least part of the week. Google your regional transportation authority for schedules, maps, fares, etc. Work out a budget that takes the reduction into account.

Hold a family meeting to discuss the situation. Let everyone know what’s going on and have everyone make extra efforts to cut down on the use of water, gas, electricity, and general wastefulness.

Consider picking up some extra work like babysitting, pet sitting, tutoring, etc. There are plenty of ideas for making extra money you can find online.
Donna

Prepare Ahead of Time

As a part-time RN, I work in preference over the PRN staff, but am cancelled in preference to the full-time staff. For the last two years, November and December have been slow in the NICU. Last year, I made sure I had shopped ahead and completed buying holiday gifts and birthday gifts. I also stocked the freezer and pantry, etc. When the call-offs came, I chose to look at them as extra time off instead of as a cut in pay. I know that is somewhat a mind game, but it worked for me.
zohnerfarms

Start with Your Budget

Personally, I prefer a furlough to a pay cut. When they quit doling out furloughs, you are still on full pay so the money comes right back. It can take years to get back to original pay if you take a pay cut.

When I’ve had pay cuts and furloughs, I started with the budget. If the net effect (I always work from take-home pay rather than gross pay) is 10%, I cut every variable line in the budget by 10% including groceries, entertainment, etc. The car insurance and cell phone bills were sort of “fixed,” so I dealt with those items next. I called the insurance company to see if I could get that lowered. (You can compare auto insurance rates here.) I did the same with cell phone. I’m on the lowest cell phone plan that has reliable service around here so there’s not much I could do about that.

Then, I added it all up to see if I came in at the new pay cut. Things like rent don’t go down (and thank goodness have not gone up!) and utilities and gas costs go up so usually the first cut only got me part way there. Then I started looking at things like clothing. For one entire year, I cut the whole clothing budget and just wore what I had and borrowed clothes for special events. That helped with the furlough costs that year. I asked for underwear and socks for gifts.

When I got down to the amount of the new lower income, I gave it one or two more shots at cutting costs so I could continue saving. I turned the thermostat down or bought bulk dry beans rather than canned, etc. This is where I stopped cutting to the bone and started shaving the bone.

This year, which is my fifth without a raise and with a higher chance of being laid off or let go, I’m working on starting a small side business that could be expanded if I’m laid off, let go, or quit in frustration at the ever-increasing workload and never-increasing pay.

Good luck with the furloughs! It can be difficult. I hope you and yours make it through.
Maggie

• 13 Steps to Preparing for a Layoff
• 5 Simple Budget Cuts That Can Save $200 a Month
• When Your Employer Cuts Your Pay
• Bare Bones Budgeting to Make It on Little Income

Reviewed October 2021