No raise in a while? Re-evaluate your spending and priorities

Woman holding a jar of moneyBeen a few years since you had a raise? If so, you may find that prices have risen even though your salary has not. As a result, it is important to re-evaluate your spending. If you are spending in the same way with the same income and things have become more expensive, you may find yourself going deep into debt and/or depleting any savings you have. This situation may require the same type of spending adjustments as someone whose income actually dropped.

Everyone needs to evaluate their financial situation regularly because the only constant is change. Delaying change as long as possible only makes the problem worse.

It is important to remember for the most part the changes you need to consider making are most likely only temporary (if you want them to be). But, if your income is now less than your expenses, you need to prioritize your spending and decide whether you are going to find a way to bring in more income, spend less, or potentially try to do both. Get creative – what things could you do to generate more income (legally, of course). Make a list of your expenses and examine it for ways to do things differently. For each area, ask if you can spend less, spend less often, or not at all – at least temporarily.

If prices are on the rise but your income is not, here are some things to start doing now:

  1.  Develop a plan. Decide where cuts can be made, control spending, set priorities on expenses, defer non-essential spending, maximize your emergency fund.
  2. Start tracking your spending sooner rather than later. This includes daily out-of-pocket spending and spending on credit cards. The best thing is to track for a month, but if that does not work, try at least two or three weeks. You can finalize your expense picture by pulling together your monthly expenses like rent/mortgage, auto expenses, utilities, and other items that you can find on this form:
  3. Compare your income and expenses. Keep in mind, your expenses should include your ability to contribute to savings – especially emergency savings and retirement.
  4. Determine your priorities. If your income falls below your expenses (including saving for emergencies), you need to make some hard choices. This may mean that everyone in the household has to give a little – including children. For example: You may need to rethink how many hobbies you participate in or spend on; children may need to choose only one sport or activity per season to participate in, etc.
  5. Review your resources. What can you ask family members to do so your family gets through this rough patch? What are non-money resources you could use so you don’t have to spend money? How about working together with friends and neighbors to save money? Some ideas include: food cooperatives, babysitting cooperatives, plant exchanges, painting parties, etc.
  6. Reduce expenses. Consider some of these possibilities:
    • lower interest rates on debt
    • redistribute income toward paying down high-interest debt and eventually free up income for other uses (see
    • use parks and free entertainment
    • use the library for books, videos, music, etc.
    • get rid of cable or telephone extras
    • reduce cell phone plans
    • reduce the amount spent on gifts
    • have potluck dinners instead of going out as often
    • barter
    • make it yourself
    • recycle
    • find a new use for old items around your house
    • go longer between haircuts
    • increase insurance deductibles (but only if you have an emergency fund)
  7. Increase income. Is there a hobby or skill you could use to generate more income? Do you have a skill you can barter with to meet family needs by spending time instead of money? Do you have old or extra items around the house that you can sell to raise extra money?

Visit or for publications with ideas of how to adjust your spending.

This entry was posted in Expenses, Financial Plans, Non Financial Resources, Spending. Bookmark the permalink.

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