Are you a single-income family or planning to be one?
Living on a single income may seem less than ideal for many, but it’s the reality for a good number of families. These families are choosing to live on one income for several reasons such as the benefits of having one stay-at-home parent and the lower costs of one parent not having to go to work.
Whether you are already living on a single income or still considering it, we have helpful tips you should consider.
15. Track your expenses.
It is very important to be able to monitor your money inflows and outflows. Without knowing this, you’ll never be able to recognise where you’re going overboard on spending. Try getting an old notebook which you don’t use anymore (or if you’re more comfortable using the smartphone, there are millions of spending tracker apps that you can use – I’m exaggerating as you know it, but there are a lot).
This way, you can cut some expenses if you see that, for example, a third of your income goes to meaningless eating out.
14. Make a budget plan.
I suggest making a budget plan after at least a couple of weeks of tracking your expenses. This is the only way to be able to come up with a realistic plan. After you find out where you need to cut corners, you need to apply these to your budget plan. Based on your sole income (it is best not to include erratic sources of income here), allot a specific amount of money for each type of expenses. For example, $50 a week for groceries? $300 for rent? The figures depend on your needs and lifestyle.
13. Cut out junk.
Repeat after me: junk has no place whatsoever in your household. And when I say “junk,” I mean all types of junk: food, clutter, ill-fitting clothes, mountains of paperwork, everything. First, you certainly need to de-clutter. The things that you haven’t used for the last couple of months are likely the same things that you won’t be using in the near future. Take them to the recycle bin or donate them to those who have less.
After de-cluttering, you need to stop buying junk. Totally remove junk food from your grocery list (your kids don’t need it — you don’t need it). Instead, buy fruits, vegetables, meat, fish — all the healthy stuff that your family will benefit from. You don’t need to go crazy over cooking either. You can save money and save time using a lot of techniques such as once a month cooking.
Stop buying clothes of poor quality from mall sales. Stop printing out things that don’t need to be printed. Stop buying things just because they look cute because, after a couple of days, they will just be another dust-gathering trinket.
12. Grow a garden.
Any kind of household, not just single income ones, should strive to be self-sufficient. Having to depend on the grocery or the market for our needs have become a norm, but it is more ideal to grow our own ingredients. Of course, this takes time and effort, but the benefit of knowing what goes into your food is incontestable.
Read more about the basics and the benefits of growing a garden here.
11. Use at most one credit card.
I would ask you to not use credit cards at all, but I know that having a credit card has its benefits. For starters, having a good credit score is helpful especially for families who are starting out. Also, not all debts are bad. There is something that we call a good debt, and this refers to debts that we make that result to gains rather than losses. Examples are borrowing money to start a business or for income-generating real estate.
But these are big debts that can be acquired through a bank. For good debts that can be acquired using a credit card, you can consider buying a computer for side jobs as an example.
10. Get into the habit of saving.
After cutting your expenses and following a budget plan, expect to see some amount of money leftover. While this is the ideal setup, don’t feel bad if you don’t have leftover money yet as long as you’re not going over your budget. Now, if you’re already seeing leftovers, don’t be tempted to spend it. Instead, keep it.
You need to get into the habit of saving before you actually incorporate this as part of your budget plan. This way, saving instead of spending will become your second nature. Once this happens, make “savings” a non-negotiable part of your budget. Allot a specific amount of money for you to save up; it would be even better to save first before paying your bills and buying groceries. This is a helpful formula to keep in mind:
Income – Savings = Expenses
The formula simply means that your expenses are what’s left after you remove the savings from your income. If you can already incorporate this to your budget plan right away, that’s excellent. But if you’re not used to saving money, follow what I suggested above and begin by saving your leftover money.
Your savings can also be divided into categories: short-term savings for the things that you want to buy (like a brand new phone or a plasma TV), long-term savings or investments, and the emergency fund. We’ll talk about investments and emergency funds next.
9. Invest your money.
Saving is mainly keeping your money safe and earning a little bit of an interest, but to tell you the truth, simply saving your money is not enough. If you want your money to grow to its full potential, I suggest you try your hand at investing. Investing in the stock market is something more and more people are doing now, and it’s not that risky. I should emphasise, though, that investing in the stock market is different from trading. Trading may result to higher gains, but the market is extremely volatile and you may lose all of your hard-earned cash. In other words, it’s just like gambling.
Investing, on the other hand, means putting your money into blue-chip companies or companies that are known to be stable. This is also a long-term process, where you keep investing in stocks for a period of about 10-30 years. Aside from the stock market, you may also look into mutual funds and bonds.
8. Set up an emergency fund.
What is an emergency fund? Basically, it is a fund that you use whenever there are emergencies – real emergencies like hospitalisations or a car breakdown. No, not having anything to wear at your class reunion does not count.
So how do you set this up? I suggest keeping the amount of money that you agreed upon (plan this with your spouse) in a bank account with an ATM card. This way, when emergencies do happen, it is easy to withdraw the money. However, you should resist the temptation of using this money for non-emergency stuff. You know, self-control is easier to deal with than regret. You’ll never know when a real emergency would happen.
7. Sell your old stuff.
Admit it: there are a lot of things inside your house that you barely even notice. It’s time to make some money out of them and make room for more important stuff. You don’t need these dust-magnets, seriously! You can categorise these into things that you need to donate and things that you can still sell. It’s relatively easy now to sell online with platforms such as eBay, so take advantage! You’ll never know how much money is hiding in your cupboard.
6. Never get into bad debt.
I mentioned good debts above (I hope you remember!), so now let’s talk about its evil twin sister. Bad debts are basically debts that don’t result to any gains and are used to buy things that depreciate or decrease in value. Examples are gadgets (ever notice how they reduce to more than half of their original value when new models come out?), a new car when you still have one that works just fine, and almost any unnecessary item.
If you need a new phone, for example, save up for it and don’t use your credit card!
5. Lean how to make your own stuff.
We briefly talked about self-sufficiency above when we talked about having your own garden, but aside from growing your own veggies, you can also be self-sufficient when it comes to beauty products, cleaning products, anything. Learn the art of DIY — we have a lot of recipes for almost all of your household needs! When you apply this, you can now remove shampoo, deodorant, pasta, tomato sauce — almost everything — from your grocery list. Bonus: things that you make yourself are usually a lot healthier than their store-bought counterparts!
4. Look for sources of additional income.
When you’re living on a single income, it doesn’t mean the parent who chooses to stay at home shouldn’t be earning! There are a lot of things the other parent can do if he or she chooses to. For example, like the tip mentioned in number 9, the family can sell their stuff that they’re no longer using. The parent who stays at home can be in charge of the selling. They don’t even have to leave the house as they can do the selling online.
If they’re crafty, the parent who stays at home can make some crafts and sell them on platforms like Etsy. They can also make video tutorials, which are a real hit with a lot of ladies and other stay-at-home mums.
There are also a lot of work from home opportunities that a stay-at-home parent can avail of. For example, there are companies who offer customer service positions on a remote and flexible basis. If one is an adept writer, he or she can also work as a freelance writer and submit content to a number of companies. The possibilities are endless!
3. Reduce monthly bills.
It is always wise to reduce expenses. Aside from removing junk and unnecessary stuff from your expenses, you can also evaluate your monthly bills! There’s a big chance that you can cut off some accounts and it will not make a big impact on the quality of your life. For instance, if you don’t even watch TV often, cut off your cable subscription. If you don’t use your house phone any more, cut off your account. You can also take a look at your mobile plans and see if you can downgrade into lower subscription plans without affecting your needs.
The reductions may seem little upfront, but when you add them up, the result is remarkable.
2. Remember the benefits.
Living on a single income is hard — there’s no sugar-coating this fact. And it is easy to give up halfway. If you have ever found yourself thinking about giving up, don’t think of yourself as a failure. This is a big change, and it’s not very comfortable at first, so these feelings are nothing but normal.
However, do remind yourself and your family about the benefits of living on a single income. If it’s not beneficial, you wouldn’t have to try it, would you? Remind your children that they’re blessed to have both parents and even more blessed to have one parent they can constantly pester (and cuddle with). Remind your spouse that even though the household’s income is now reduced, your expenses are also reduced so there’s balance. Remind everyone that you’re not only living on a single income but also on the road to becoming a self-sufficient — and much healthier — family. You can even write these down to remind yourself!
1. Live within your means.
Never ever be tempted to spend beyond your means. This is the first step to downfall that is hard to recover from. Don’t be envious of what your neighbour has; instead, focus on what you have. Don’t feel the need to upgrade every now and then. If something you own is still perfectly fine, there’s no need to upgrade. In fact, if you can downgrade, then downgrade!
Living within your means is not as easy as it sounds, but it’s the only way to attain balance. You can never spend more than you earn, and you can never keep on augmenting your income just to fit your growing number of wants. You’re only looking for trouble if you keep chasing after material desires.
Instead, live simply and focus on what your family truly needs. Save enough money to travel. Bond over activities that don’t require much spending. Find joy in the things that are cheap and free. Hugs and kisses are free, just so you know.
For more tips, why don’t you check out our book, Live Well on Less? This is your ultimate guide to being frugal, saving money, eating healthy, and living a better, simpler lifestyle.