Unpredictable job market
In theory, a growing economy implies a thriving job market. However, many high-income workers have lost their jobs even as their industries continue to expand.
According to data from Layoffs.fyi, 384 technology companies have collectively laid off more than 124,000 employees in 2024 alone. This wave of job cuts follows significant disruptions in the tech industry during 2022 and 2023 — when a staggering 428,449 workers were let go. At the same time, the tech industry is seeing rapid growth in artificial intelligence adoption.
Similarly, 68% of financial firms reported an increase in staff turnover, and 50% of finance executives acknowledged layoffs in 2024, according to Fiverr.
In this difficult job market, many laid-off white-collar workers have struggled to replace their six-figure salaries and have settled for lower pay, according to Business Insider. Like Newton, many now face hard choices and uncomfortable adjustments to their lifestyle.
If you’re facing or preparing for a sudden dip in income, here’s how you can bolster your finances.
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Learn MoreManaging income loss
To manage a sudden drop in income, you must reassess all your expenses and lifestyle costs. For most people, the first target should be debt.
By the end of the third quarter of 2024, American households collectively carried $17.94 trillion in debt, $4.96 trillion of which was not housing-related, according to the Federal Reserve. This means most households may need to examine their credit card, personal loan and auto loan debt if their income drops, as these liabilities could quickly become unsustainable.
The next step is to focus on expenses. Frequent vacations, eating out and shopping sprees may no longer be affordable. In such situations, temporarily scaling back to a bare-bones budget may be necessary. Consider adopting Dave Ramsey’s famous “beans and rice” approach to pay off debt rapidly and start accumulating savings.
Even if you’re not currently facing a salary shock or layoff, it’s wise to minimize debt and maximize emergency savings to create a safety net. Newton reportedly earned $133 million during his career, according to Sport Trac. If he managed to save and invest even a portion of that income, it’s reasonable to assume he’s still a multimillionaire.
Similarly, if you’re a high-income entrepreneur or employee, prioritize setting aside a fixed amount monthly and invest it wisely. Passive income from these savings and investments can help you stay afloat if your career takes an unexpected turn.
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