What You Can Learn About Yourself After Taking a Pay Cut

No one likes taking a pay cut. That feeling of working for less money than you were previously making can be upsetting and sometimes even demoralizing. You've worked hard to secure the paycheck you receive. Accepting a pay cut can create several changes in your life, with a definite impact on the way you spend and save your money.

But sometimes less is more, and with a pay cut, you can also learn several things about yourself without money clouding your judgment. Taking a smaller paycheck each month can change your perspective on your career and help you reevaluate the way you live your life. Once you've accepted your new financial situation, take some time to reflect on yourself and the lessons that come with a more frugal lifestyle. You'll be surprised to see what you learn about who you are as an individual.

[See: How to Live on $13,000 a Year.]

1. Re-prioritize what's important in your life. When presented with a smaller paycheck, money is no longer the focus of your entire workday. You'll have to budget more carefully to stay within your monthly limit, but this also means that you can find time to focus on less materialistic goods and identify what's most important in your life. Less money means fewer material items, and you'll start to realize that your happiness and satisfaction aren't contingent upon the things you can buy. Money can buy things that might contribute to your immediate happiness, but proper spending and saving habits can ensure your long-term well-being. Your perspective will change when you are faced with fewer resources at your disposal, and you'll have more time to re-focus on things that don't cost money, like your family, friends and other personal relationships.

[See: 8 Big Budgeting Blunders -- and How to Fix Them.]

2. Spend time on your work-life balance. We can all agree that the weekend is never long enough, but how many of us find ourselves stuck in a constant working cycle? No one wants to be working just to live, yet many of us will willingly sacrifice our free time and personal health in order to chase a hefty paycheck. Contrast this with millennials who, in a recent Fidelity study, said they were open to pay cuts if they are given the option of having a better work-life balance. Sure, you might not be getting paid as much but an appropriate work-life balance can result in an overall positive attitude and better quality of life. Your paycheck means nothing if you find yourself miserable or forcing yourself out of bed just to get to work. If you find you are unhappy at your current employer, it may be worth looking into negotiating a pay cut and time away from the office if it results in a healthier work lifestyle that aligns with your passions and interests.

3. Fulfillment is more than earning money. While some people may believe that money can buy you happiness, there are plenty of things, such as personal fulfillment and satisfaction, that have little or nothing to do with money. When you take a pay cut, there will be certain things for which you'll need to budget. No more spending frivolously or purchasing things you think you need but actually don't. You may also come to realize that your income is not at all a factor in achieving a certain level of happiness. Rather than pursue a paycheck in the six figures or higher, aim for financial stability and look for experiences that bring daily satisfaction to your life. Try volunteering for a social cause or spending extra time with your family. Following a cause or purpose can fill you with a sense of fulfillment that can't be replicated with cash or purchases.

[See: 12 Habits of Phenomenally Frugal Families.]

4. Assess your true value. Many people evaluate their skill sets and capabilities based on how much money they earn. The battle to see how much money we can earn never ends, and money is no longer essential for living your life to the fullest. Taking a lower salary can help you evaluate your skills and determine the true amount of money you are worth. It can also help you figure out what you want to do professionally and then identify the technical skills you'll need to get there. By focusing on the areas you excel in and honing your skills, you can begin to pin down your true value as an employee and build up valuable skill sets that employers will be willing to pay more for. Suppose you take a pay cut at your current employer and realize your value as a writer is more than the money you are getting paid. Your employer might be paying you $20 an hour, but your writing abilities are actually worth closer to $75 to $100 an hour, something you may not have realized if you didn't take that initial pay cut.

5. New opportunities open up. After a pay cut, you may be motivated to take greater risks and challenge yourself in areas you previously never considered. Perhaps now is the time to change careers like you've been meaning to, or to head down the entrepreneurial path and see what awaits you. When our days are routine and steady, we tend to avoid seeking change and anything that could disrupt our professional lives. But a decreasing salary could just be the incentive you might need to go out and try something you've thought about and never pursued. It never hurts to keep your eyes open to new opportunities, and taking a pay cut can teach you about risk and how to live on less than you thought you could.

Before you accept any type of pay cut, you want to assess how it will impact you financially and, if you have a family, how it will influence your lifestyle. Weigh your options and create a plan that details your budgeting. Start thinking of a backup plan for the worst case scenario. Identify what areas you can cut back on and keep an open mind. While a pay cut means less money for you and your family, it can also open up new perspectives and opportunities that were previously shrouded by your paycheck.

Josh Felber, a serial entrepreneur and high performance coach, focuses on helping people design, develop and deliver their passion and expertise to the world so they can have the time, freedom and lifestyle they want. He has co-authored two best-selling books, one with Brian Tracy and another with Steve Forbes. Josh is an Emmy award-winning executive producer of "Visioneer: The Peter Diamandis Story" and "The Rebound," a documentary on the Miami Heat wheelchair basketball team. Josh has appeared as a guest expert on NBC, CBS, ABC and Fox, and his biography was picked up by the E channel. He is a contributor to Entrepreneur.com, Inc.com, Businessinsider.com and Forbes.com. Learn more at joshfelber.com.