#StretchYourRinggit – How To Survive A Pay Cut During COVID-19

Category: Money Tips

Ever since the Movement Control Order (MCO) was enforced, many employers were left with no choice but to deduct or cut the employees’ salaries. This has impacted many employed Malaysians to search for ways to survive financially. Read this article to find out how you can handle a pay cut during this pandemic.



If you’re one of the many affected by the COVID-19, chances are you have had the misfortune of being retrenched or have a salary deduction. As of June 2, a total of 12.7 million Malaysians are unemployed. The figure is expected to climb up to 2 million people according to Malaysian Employers Federation executive director Datuk Shamsuddin Bardan.

Or perhaps you could have just made a big career change, and in pursuant of your dream job, you agreed to taking a pay cut. 

If you’re experiencing a reduction in your income, you may be struggling with meeting your commitments. So… what can you do? 

You’d obviously know that you need to rebudget your monthly spendings. Rebudgetting is truly one of the best ways to handle pay cuts. But before you start, you need to do the following first: 

1. Decide where you can trim your spending 

What can you live without? In this period, you may want to consider trimming the excess spending that you don’t really need

If your gym membership costs RM200, you may want to pause that until your finances improve later on. You can always work out at home to stay healthy during this difficult time. 

Likewise when it comes to entertainment, shopping, and other lifestyle habits – cut back as much as you can, but perhaps not completely. You don’t want to live miserably too. 

You can always try to find alternatives to your non-essential spending. If you’re used to shopping at high-end supermarkets and choosing what you want without really following a budget, you may want to consider shopping at a wholesaler mall where things are generally cheaper when bought in bulk. 

Cut back on your restaurant and cafe visits at this point, too. It’s always cheaper (not to mention healthier) to cook for yourself, where you can easily whip up 3-4 meals with just a few simple ingredients. 

And if you have vices, now would be a good time to start shaking it off. 

2. Renegotiate the most important commitments 

If you’re renting, consider speaking to your landlord about your current situation and see if you can renegotiate your terms. Try suggesting a payment plan that works for your new budget. You can suggest paying 50% less for the upcoming months, and when your salary is reinstated, to pay the full monthly rental fee plus a sum of your owing until they are cleared. 

If you live alone, you can consider taking on a roommate to share the rent, or packing up and moving to a smaller place so you can still maintain your privacy. 

If you have a mortgage, car loan, personal loan, or any other kind of loans, you can always speak to your bank to see how you can reschedule and/or restructure your loans. Here’s how it works: 

  • Reschedule – you negotiate a reduction of monthly instalment, and lengthen your loan tenure.
  • Restructure – you completely change the existing terms of your loan, but this will come with additional cost on your end as it involves administrative and legal work. 


This brings us to our next point… 

3. Take up the COVID-19 relief efforts 

As you would probably know by now, the Malaysian government and Bank Negara have introduced the COVID-19 loan moratorium for the general population. 

Although it’s supposed to end in September 2020, there’s a 3-month extension for a select group of people – those who are unemployed and are unable to find a new job, and those who have had their salary affected due to COVID-19. 

If you fall within this category, here’s is the main relief you can enjoy: 

  • Loan instalment reduction, proportionate to your salary and depending on the type of loan
  • Can last for at least 6 months
  • Potential extension at the end, depending on your salary


Other reliefs include: 

  • For hire purchase (car loans), you can get a revised instalment schedule according to the Hire-Purchase Act 1967
  • For special circumstances deemed appropriate by your bank, you can also:
    • Pay interest-only for a period of time
    • Lengthen your overall period of the loan to reduce monthly instalments
    • Get other forms of flexibility until your are in a more stable position


To apply, just speak to your bank from 7th August 2020 onwards. 

Read also: 29 July 2020 Update: 3 Months Loan Moratorium Extension (Latest COVID-19 Loan Moratorium Info & Guide @ Bank Negara Malaysia)

4. Don’t miss your payments 

With a paycut, it may seem disheartening to pay your bills. After paying off your commitments, what you’re left with may be little or close to nothing. 

But you should always put your bill and commitment repayment as your top priority. Don’t miss your payments – not even for a month – as doing so may get you in big trouble. 

For one, missing your payments will show up in your credit report. This may tank your credit score and make it difficult for you to get financing help in the future. 

Another really important thing – missing your payments have serious consequences to your finances. If you’re not paying off your credit card balance, you’re going to snowball your debt with the notoriously high credit card interest rates (from 15% p.a.)

Missing payments for utilities, internet, phone, water, and all may also leave you handicapped as you may have your sources cut until you pay off your debt. That will leave you with a huge inconvenience, so be sure to pay your bills on time. 

Read also: Find Out What These Credit Reporting Agencies Say About Your Credit History

5. Keep saving – no matter how little you can 

You may have used your emergency fund to help you weather through this change, but if ever possible, continue the habit of saving. (Or start now if you haven’t already!) Having a growing emergency fund helps you avoid taking up unnecessary loans to help you stay afloat. 

Even if you have to slash your savings contribution by half or more, or even if you have to save as little as RM50 a month, you should continue to do so. Be sure to put your savings into an interest-generating account instead of saving it as cash in your coin box. You will have something to gain at the end of the day, regardless how small it may seem. 

6. Upskill and look for a second income 

The best way to survive a pay cut would be to find a secondary income source.  Some people freelance according to their skillset, some find other means – like moonlighting as a delivery driver or helping out at the wet market. 

At this point, it would also help to upskill yourself. There are many free resources and classes available online which you can learn a thing or two from. By upskilling yourself, you can also look for a new job with a better salary. 

Read also: 8 Side Jobs for Malaysians to Earn Extra Money During CMCO

What you’re going through isn’t permanent

It’s a difficult time for the world, and you’re not going through this pay cut alone. But keep your chin up because you can still make decisions to better your situation – either by finding a better paying job, or finding ways to work around your current situation. 

The most important thing right now is for you to assess your finances, set a new budget, and stick to it. A budget helps you keep track of how much money you have coming in, or lack thereof, and how much money you’ll need to cover costs or have spent while you’re going through unemployment. It’s a useful tool to help you not only manage your finances better, but also plan your financial future. It allows you to stretch your ringgit by getting the most out of your money.

Until things get better, we wish you the best of luck as you weather through these changes in your life! 

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