As we find ourselves rapidly approaching a new year, there are some among us who may be experiencing low-key anxiety about what their financial fortunes will be, in the light of continuing inflation, the ongoing Russia-Ukraine war, and fears in some sectors of a possible global recession. Worse, if you’ve been told that the companies that you work for intend to execute salary freezes for the foreseeable future. With all these variables chopping at your spending power; what does it all mean, in relation to how you go about enjoying the yuletide season? Christmas can already be depressing and full of anxiety for some on a regular basis; add in financial uncertainty and it can steal your joy.

What is a wage freeze?

A wage, salary or pay freeze is exactly what the phrase suggests: a freezing of wages or, in other words, a period of time when your company suspends increases to staff wages. In your head you’re like “but I am still getting paid.” However; a dollar today is not a dollar tomorrow. So though wage freezes don’t last forever and preferred to being laid off, one can take a cue from the stance of their employer. Typically, a company will effect a wage freeze as a result of financial constraints or foreseeable constraints it has projected, like a recession. So it will take a decision to keep salaries in a holding pattern for a while until it once again begins experiencing better results in its bottom line. Salaries, it should be pointed out, aren’t the only things that will be affected; the organisation has to keep its other fixed costs controlled. Fixed costs are its business expenses that aren’t changeable from month to month, and that aren’t directly related to production — costs such as salary, interest payments, and so on. The cue you should take is to look at your personal finances and see where you can reduce variable cost and keep fixed costs constant.

It’s not personal

Some employees may recoil upon hearing that their salary won’t be topped up in the time frame they were expecting it to. Look how hard I worked last year, they’ll grouse. The boss really hates me.

No, that’s really not it at all.

If you lived through the world crisis of the last two-odd years, you should, on some level, understand that businesses — the ones that survived, at any rate — are only just now finding their footing, if not quite completely rebounding, in this new so-called post-pandemic age. Some businesses had to downsize, meaning they had to let staff go. Remind yourself that in these crucial times, it is extremely important to have a job and that, in actual fact, a wage freeze is usually a much preferable alternative.

Tips to prepare for it

Still, news of a wage freeze can hit hard. Especially when you’d been bracing perhaps to approach your employer and present your best arguments about why you deserve a raise in the coming year. So what do you do now?

1. Draw on all your reserves of patience so that you can assess the situation in a clear-eyed way. Now may be the time for outside-the-box thinking to make the necessary plans to proceed, whether for inspiration on ways to earn additional income from a side hustle, or just leveraging non-monetary benefits in lieu of money on your current job, to take off some financial pressure, such as, if your HR department is amenable, asking them to allow you to work from home and so save on gas from a costly daily commute.

2. It seems to go without saying, and yet it must be said: Cut down on expenses. Especially with the holiday spending season looming. Yes, you’re tired of cutting back, but that’s the new normal in the current financial atmosphere. Go to your Christmas list and check it more than twice. Which purchases can be postponed? Which ones can be substituted for less expensive and extravagant alternatives? Avoid the temptation of purchasing items you can’t afford with your credit card, especially if the debt you’re already carrying is significant. Set a Christmas budget and stick to it! Aside from gifts this includes all the eating out and parties you are planning on attending.

3. Don’t even think about touching your emergency savings or investments for random spending. Be reminded that this is a fund specifically set up for when worse comes to worst, such as if you outright lose your job and need to keep afloat until you get back on your feet, or for big-ticket compulsory spend such as car licensing and insurance of your car and your children’s school fees.

4. Reconfigure your financial plan. With a wage freeze your monthly savings and investment plans will take a hit, especially in the short term. The thing to do is come up with a strategy that will allow for minimal impact to your goals and not take you too far off the path to arriving at your long-term financial well-being. Think long-term: should I buy that party ticket or invest by averaging down the cost on blue chip stocks that are currently depressed.

5. Look for another job. If you’ve done all you can to cut expenses and you still can’t make ends meet, examine your options elsewhere. Especially if your employer can’t give you timelines for when the freeze will thaw. You can’t be expected to remain in a state of uncertainty indefinitely. The financial controller’s job is to anticipate how long before the company can expect to rebound from cost-cutting exercises based on market reaction.

A Smooth Sea Never Made A Skilled Sailor — Franklin D Roosevelt 2023 is sure to be an interesting ride. The FED has indicated a tapering of interest rate increases but the Russia-Ukraine war still looms and China is still having total lockdowns and now unrest; I say all of this to say: Strap on your boats, sailor, because we are in for some choppy seas!