What to Do When Your Income Drops: A 4-Step Financial Survival Plan

When income drops suddenly, it may feel overwhelming, but it doesn’t have to lead to financial ruin. Whether due to job loss, reduced hours, or unexpected life events, there are practical steps you can take right now to stabilize your finances and regain control. You may also download the “What to do When Income Drops” Worksheet from the Resources page.

In this post, we’ll walk you through a four-step plan designed to help you manage a temporary income loss and build a short-term financial strategy using your existing resources when income drops.

Step 1: Take Inventory of Your Financial Resources and Expenses When Income Drops

Before making any decisions, you need a clear picture of where you stand. Start by listing all your monetary and human capital resources, including:

• Cash on hand
• Checking and savings account balances
• Property or assets (vehicles, jewelry, collectibles)
• Skills, education, and time (human capital)

Next, inventory your monthly expenses by categorizing them as:

• Fixed expenses (mortgage, car payments, insurance)
• Flexible expenses (groceries, utilities, gas)
• Occasional expenses (upcoming registrations, gift giving, etc.)

Pro Tip: Don’t forget to identify local community resources like food banks, utility assistance programs, or job placement services. Websites like 211utah.org can help you find aid in your area.

Step 2: Brainstorm Ways to Cut Costs and Boost Income

Now that you have a financial snapshot, brainstorm ways to simplify your lifestyle and reduce spending. This can include:

• Practicing step-down spending (e.g., cooking at home instead of dining out)
• Cutting non-essential expenses
• Applying for temporary assistance programs
• Communicating with lenders to negotiate reduced payments or forbearance

At the same time, look for ways to increase income, such as:

• Taking a part-time or freelance job
• Selling unused items
• Having other household members contribute if possible
• Applying for unemployment or benefit programs

Write down all ideas—even the ones that seem minor. They can add up quickly.

Step 3: Create a Short-Term Financial Plan When Income Drops

Based on your inventory and brainstorm, build a custom short-term plan that addresses your most urgent needs. Prioritize the essentials first:

1. Food and water
2. Housing and utilities
3. Transportation
4. Insurance and medications

Then, set specific action steps you can take today, this week, and this month. Keep the plan realistic and adaptable.

Step 4: Review, Revise, and Rebuild

As your situation changes, revisit your plan regularly. Adjust as you learn more about your finances or gain access to new resources. Once your income stabilizes, focus on rebuilding:

• Replenish your emergency fund
• Restock essential supplies
• Reprioritize delayed purchases
• Continue using mindful spending habits

Final Thoughts

Losing income is stressful—but it’s manageable with the right strategy. By taking a structured approach and leveraging both personal and community resources, you can weather the financial storm and emerge more resilient than ever.

Need help? Contact a HUD-approved housing counselor, visit consumerfinance.gov, or check out UtahMoneyMatters.org for more support and resources. Download the “What to do When Income Drops” Worksheet from the Resources page.