HE-247
1986
When Your Income Drops 8
A drop or loss of income forces a change in spending priorities. When you’re forced to think about it, you discover that some goods and services are more vital for survival than others.
For many families, the undesirable effects of a cut in income can be minimized by following a few basic survival principles. With a positive attitude, learning and following good management practices can be a source of satisfaction in themselves. Many persons realize, after learning to manage their resources better, that their situation is not as bad as it seemed. Their income is less than before, but the “slack” in their financial system has been reduced and they are doing more with what they have.

Economize
Economizing refers to allocating your personal and family resources where they do the most good, either by increasing your family’s well-being or, in a time of recession, by minimizing economic hardship.

To economize does not necessarily mean to buy less of an item —it might even imply purchasing more. For example, if you determine that home baking or cooking or any other activity would pay for itself by either saving resources or producing income, then increasing expenditures for needed supplies may be in order.
Sharpen survival skills
As another example, if you believe a successful job search requires suitable clothing or a skill you do not have, spending to achieve these may be the most productive use of your limited resources. Keep in mind, though, you must decrease spending more than equivalently in other areas if your income has dropped.

Remember the economizing principle: use your resources so they do the most good in terms of meeting your needs and wants in the short and longer term. Part of your resources will be used to buy goods and services you use or consume. Another part of your resources you will want to invest for the future. You might invest in ways to save or earn money by producing services, or you might invest in yourself —in job training, a wardrobe, or changing location.

Economizing can be achieved in a number of ways: substituting less for more costly resources; finding new uses for resources you already have; conserving resources through wise use; cooperating with others to
stretch resources; taking advantage of community resources.
Substitute: Substitute less for more costly resources. If you have some time and talent you could substitute for purchased time and talent, do it! Walk —don’t drive —to the neighborhood store. Eat at home rather than out. Cook from basics rather than aluminum T.V. trays. Rent costly equipment you seldom use. Examples abound but the most important key to success is developing a habit of mind. Think, “What could I substitute that would do the job for less?”

Conserve: Conserve your resources. Avoid waste. Keep your family health, your skills and your possessions in good condition. Try to get the most use or satisfaction out of each trip in the car, each use of the stove, each load in the washing machine, each dollar already sunk in clothing. Think, “How can I make this resource last? How can I use it more efficiently?”

Exploit: Find new uses for resources you already have. Could you rent a room to help pay the rent and provide some company? How about renting part of your yard for a garden plot? For parking? If you’re driving to work, could you carpool and leave your car at home every other day?

If you bake or sew or tend your own small children or clean your own house, could you expand these into income-producing activities? Continued on page 4.
Cooperative Extension Service • Purdue University • West Lafayette, Indiana 47907