Since the financial crisis of 2008 and the subsequent Great Recession, the stark reality is that a large number of us have had to get used to living on a lot less money than before.
In the immediate aftermath of the crisis, those employees worst affected were unfortunate enough to lose their jobs and either had to endure a spell of unemployment or were reduced to taking any job they could in order to pay the bills.
Others, although escaping the dole queue, instead had to face the prospect of doing the same work for a much lower wage, since this was the only way their employer could afford to continue trading.
Even those companies that were relatively unscathed by the initial crisis have still found it necessary to make cuts in subsequent years. One area this is being felt is with employees’ salaries and the introduction of long-term pay freezes.
So, your pay has been frozen
If you have just been told that your much needed yearly pay rise is on hold for the foreseeable future, then accept my sympathies. Of course, you don’t need me to tell you that this will present some financial challenges along the way.
Still, it could be worse, at least you’ve still got a job. But that’s not to diminish the effect the pay freeze will have on your finances; although you don’t have less money per se, in spending terms you do because the prices of everything else are going up due to inflation: particularly fuel and food, the basics of life, which generally become more expensive year-on-year.
However, there are ways you can mitigate the problem and it may just be the spur you need to change your career for the better.
Talk to your boss
Firstly, if possible, arrange a meeting with your boss to discuss the reasons behind the pay freeze and the potential time scale before salaries may go up again. Hopefully your boss will be candid with you about the financial health of the company and give you an indication as to where this all may be leading. More on this later.
Also, ask if there are any other ways your boss can make up for the freeze, e.g by allowing you to work from home for a few days a month. This would save you the cost of commuting and other associated expenses (such as eating out for lunch).
Cut your cloth accordingly
At home, it’s important that you make the most of the money you do have coming in. You’re probably going to need to put a hold on the big ticket purchases for a while, just until you’ve worked out where your finances are at. Depending on how much you normally get from a wage increase, you may find a significant shortfall in your spending power.
With the large purchases under control, the next step is have a look at your smaller spends. Identify any areas where savings can be made; can you switch to cheaper brands, or do with slightly less of this or that? It’s surprising how much can be cut off the monthly bill with a few sacrifices here and there. Also, investigate switching your fuel and utility providers to ones offering lower prices or other incentives; some even guarantee price freezes which work in your favour!
Sell your stuff
Another useful tip is to sell some of your unwanted possessions on eBay or Amazon marketplace or via one of the numerous other websites that offer cash for second hand goods. Not only will you get a welcome injection of cash, but also you’ll go some way to decluttering your home, which is always a good thing.
Hopefully, spending some of your time budgeting and hawking a few things might be all it takes to cover your shortfall and get your finances back on track. However, if it’s still not enough to cover your shortfall, then more drastic measures may be required.
Look for other work opportunities
Getting extra work is a tough option, that’s for sure, but if you could find another revenue stream, then it would help negate not only your current financial situation but also give you an extra layer of security if things get worse in your main job.
Of course, your ultimate choice in this situation may be to look for another job entirely: depending on what your boss said regarding the pay freeze, it may indicate the beginning of the end for your employer, in which case you’d be better jumping ship before it sinks.
In the best case scenario, you may be able to find another job which not only pays a better salary but also has much better career prospects.
There’s no doubt that it’s been a tough few years for many employers and employees. However, there do seem to be tentative signs that the situation is improving and that pay freezes may be thawing somewhat. If you have been unfortunate enough to suffer them, then all I can say is stick in there. Hopefully, things will improve soon.