From the post-pandemic effects and the current economic recession, many people have seen a drop in their family income, worrying about job loss, and piling up debt.
Most people will confirm that taking care of yourself and managing your money can be tough, let alone managing a family. As a result, for single-income households, paying bills and saving money is just easier said than done.
Perhaps you or your spouse lost their job and are now wondering how you can make ends meet on one income. Is it possible for your family to survive on a single income? While it is challenging to sustain a family on a single income, it is achievable.
You will have to learn how to balance your money, live comfortably on less, and not only survive but also thrive!
How can you live on one income in an economy that is increasingly favouring two-income households?
Let’s explore some useful tips below.
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You can do all you want to avoid drinking coffee, or buying lunch at work, but if you have a huge loan that you are servicing or another major expense such as school fees, you will fail if these do not come top of the list.
If you previously were depending on two incomes and now you only have one, your budget will have to reflect this. You may have to make difficult, if not terrifying, changes.
Many people's budgets are largely made up of the items listed below, and each one needs careful consideration. You can start by asking yourself these questions;
Does this mean that you must relocate, sell your car or change your child’s school in order to survive on one income? Not really.
However, living on one paycheck oftentimes necessitates considerable sacrifices.
Making a budget for your household is significant, but it will become much more important when you just have one source of income.
Starting by sitting down and going through your monthly expenditures will make it easy to create a list of all your monthly expenses. You should check your receipts or trace your transactions. Consider the following key types of budget categories:
The 50/30/20 budgeting rule is a good place to start from.
Using the list you established above, compare your monthly spending to each of these three categories. If your spending patterns stray dramatically from the 50/30/20 rule, it's time to rethink your spending habits.
Examine the essentials category as well to see if there are any items that may be transferred. If this still doesn't work for you you can try other budgeting styles like the 60/40 budget.
It may appear impossible for a single-income family to save money, but sometimes even little consistent savings can have a significant impact.
Read Also: 6 Simple Steps to Create a Working Budget
Once you've designed your budget and established a financially smart routine, you should begin making modifications to free up even more money in your budget.
You can minimise your monthly operational costs by eliminating bills such as TV subscriptions and frequent entertainment costs.
You may not see immediate benefits however, begin by concentrating on what will yield the best results.
If your water bill is already high, cutting back on water consumption may not make much of an immediate impact. Stick to it nonetheless. Always think about where your money is going and how much your costs may be reduced to produce greater potential cash flow.
Making financial changes when transitioning from two to one income may be required, so you and your spouse should devise a strategy for an emergency fund.
Even if you lose one source of income, the bills will still come. You should begin by developing and growing your emergency fund. You don't want to be caught off guard in an emergency because life happens.
You should keep some cash aside that can be accessed in case the roof leaks, the car needs repairs, or you need to take a family member to the hospital for emergency treatment.
If you don't have some money set aside, you risk piling on more debt, which isn't ideal considering that you just have one source of income.
Many experts advise that an emergency fund should contain enough money to last three to six months. Assume your partner falls ill and misses a week or more of work, your emergency fund may be able to help cover the bills until they feel better and are able to resume work.
If you have trimmed your expenditure but are still short on cash, you may need to consider how the non-working parent might earn some money without returning to work full-time.
Perhaps that partner might work from home on a contract or freelance basis. Is there any way you might use your skills to work remotely for yourself?
Even though establishing your own business might be intimidating, you can do it! All you have to do is consider what you are good at or what you can provide to others, then work out how to monetize it.
Regardless of how you choose to supplement your income, you can keep finding ways to meet both of your financial needs.
Rather than inventing reasons not to attempt a side hustle, be inventive and seek methods to make it work.
It is very possible to support a family on a single income. Planning, prudent financial decisions, establishing a budget, frugal living, and having some savings will be necessary.
To financially savvy families!