How to Cope With a Salary Cut


Salary cuts aren’t reserved for government officials who earn six figures; they happen to wee people like us! Here’s how we’re coping with our most recent salary cut.

I say “most recent” salary cut because the first one was about three months ago. It was significant. We just got the second one a couple days ago. Also significant. Put them together, and we’re earning half of what we did three months ago.

A salary decrease of 50% in three months is a huge financial blow – not to mention the psychological and emotional toll it takes on us as employees and marriage partners! Earning less money hurts on all levels.





My tips on how to cope with a salary cut may help you tackle your own financial issues. I’m not offering tips on saving money or living on a low salary – though I have linked to those types of articles at the end of this post.

Rather, this article is more about coping with the financial and professional reality of a salary cut.

Coping With a 50% Decrease in Salary

Gawd – “50% salary cut” are words I never wanted to say! I wasn’t kidding when I said it’s a blow financially, emotionally, and relationally. It also undermines the confidence and respect one has for the company, and even in oneself as an employee.

But, as a wise reader once told me: This too shall pass, and can turn into something you never imagined…if you let it!

Ask for three days to respond to the news of the salary cut

If your boss or the company owner “offers” a 25% salary cut, tell her you need a few days to think about it. It may be non-negotiable, but it’s important to take the time to think. You might review the law, company policies, employee standards, Employment Insurance rules, etc.

A second reason to ask for a few days is that you don’t want to react out of shock, anger, fear, insecurity, or shock. Those are emotions that may trigger you to say something you regret.

Third, you need to take time to think about quitting your job versus taking the salary cut. What happens if you don’t accept the slash? Will you be fired or let go? How will this affect Employment Insurance (EI) benefits? I don’t know your answers to these questions, despite our recent experience with salary cuts. Everyone’s situation is unique, and I don’t have specific answers for individuals.

Negotiate a less hefty salary cut

Not all salary cuts are negotiable. But, your financial security is worth fighting for! It may be too late at this point to negotiate a lower salary cut – but this is your chance to think about and get prepared for future cuts. Don’t lull yourself into a false sense of security: your current salary cut doesn’t protect you against future cuts, and doesn’t guarantee you’ll still be employed in three months or a year.

As I mentioned, we’re coping with two salary cuts in three months. The first one was shocking and out of the blue; the second salary cut is (to me) a sign the ship is sinking. That’s what makes it even more important to try to negotiate a less hefty salary cut…you may be looking for work soon and you may need the financial cushion.



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Talk to your fellow employees about the salary cut

I know it’s gauche and rude to talk about money, but this isn’t the time to be shy. Are you the only employee getting a salary cut? Is everyone earning less money – even the boss or managers? What is the company’s long-term vision and strategic plan?

Don’t isolate yourself out of embarrassment or shame that you’re earning less money. Don’t bury your head in the sand, hoping the financial problems will disappear! Talk to your colleagues, and try to determine the extent of the company’s problems.

I’d also start looking for work. But, this is a highly individual decision because so many factors are at play (eg, occupation, location, family size, financial loans, spending habits, lifestyle, dependants, job market, etc). Another question I’d ask a colleague is if they’re looking for a new job. I’d also ask my boss and managers for their honest opinions on the future of the company and their own professional career plans.

If the thought of looking for work makes you panic, read How to Quit Your Job When You’re Scared.

Review your mortgage, loans, Visa rate, household bills, etc

salary decreaseOne of the most important ways to cope with a salary cut is to trim the fat from your budget as soon as possible. I want to cancel our cable, and just use Netflix as our entertainment. I also want to cancel our home phone (landline) – but that would mean getting a cell phone for me! Cells are more expensive than landlines, especially if I want a smart phone.

Sit down with your spouse – and then eventually your kids – and review your household budget. It’s really important to do this right away. Your salary cut means your lifestyle will be affected – it SHOULD be affected! If you continue to spend the same amount of money, you’ll find yourself in financial problems worse than a 25% decrease in salary.

Articles on earning less money



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If you have any thoughts on coping when you’re earning less money, please comment below…


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4 thoughts on “How to Cope With a Salary Cut

  • Laurie Post author

    Thanks for your comments, Alana!

    We’ve actually moved beyond “just” getting a salary cut to actually getting laid off. It’s scary – I hadn’t thought about health insurance! But, I think this is good for us. It’s time to lean on God, take a leap of faith, and challenge ourselves to experience life in a new way. I believe this is ultimately a good thing.

  • Alana (@RamblinGarden)

    I have never had to deal with salary cuts but my husband and I both have suffered layoffs, as has my young adult son. My brother in law and his wife both lost their jobs within 3 months of each other (over two years ago now). All of us have had xperience in having to cut back and now my husband faces having his hours cut, a consequence of the coming health care reforms in the United States. Your article was excellent, especially the advice for coping with salary cuts. Here in the United States there are some additional consequences that must be thought of with actual job loss, including possible loss of health insurance. Also I think our cell phone situation may be a little different from Canada’s – if you don’t want a smart phone we do have choices of prepaid phones that can be cheaper than a landline.

  • Laurie

    You’re welcome, Renee — thanks for your comment! No I have to write an article about negotiating a layoff package, because that’s where we are now…

  • Renee Roberts

    It’s true, salary cuts are all too common nowadays and definitely painful to bear. Thanks for your practical tips on handling the situation.