The economy is growing, evolving, and shifting at rates never seen before. Locations that were once booming manufacturing centers are now practically ghost towns. Areas overseas that were once ravaged by poverty have been rebuilt and become booming technological centers of business. The demand for employees in any given field is always changing. Because of globalization and other technological and economic factors, we are simply much more likely to face a radical change in our incomes. In fact, we are three times more likely to have a 50% swing in our income year to year than just a generation ago. This raises the question, would you be ready if 50% of your income disappeared tomorrow?

What would you do if you found out that half of your income was suddenly gone? You lost your job and the only thing you can find right now is paying a fraction of what your previous job paid. You might think this is an unlikely situation, but it happens on all the time. Would you have enough money to make your monthly bills each month? Would you be able to put food on the table? Would you have to borrow money just to take care of your monthly expenses? Would all of your money in savings quickly dry up?

Most people are woefully unprepared for a sudden shift in salary. Most Americans have a significant amount of debt that they have to service on a monthly basis, creating all sorts of obligations for them to meet. Between a mortgage payment, car payments, credit card payments, and other debts, it’s not uncommon for some families to have $2000 or $3000 going out each month just to keep up on their monthly payments, and that’s before they pay for food, utilities, clothing, gasoline and insurances!

The best way to prepare your self for a potential sudden change in income is to reduce your debt level and keep a nice healthy emergency fund. Every family should have a good three to six months of expenses saved up in a special savings account for just such an occasion. If you’ve got more than your share of debt, you should also throw any extra money you get toward them. This way if you were to face a sudden drop in income, you would have les debt that you would have to worry about paying on each month with your reduced income.

How long could you survive on half of your existing income? Could you even make it a month? If the answer isn’t very long, it’s time to cut back, attack your debts, and throw more money into savings.