6 Best Approaches to Live and Thrive in a Single Income Household
Several circumstances can lead a family to live off a single income like a medical condition, childbirth or job loss. One may start a family with this set-up, while others make the transition as their family situation changes.
Regardless of the reasons, living and thriving in a single income can be initially daunting, but it’s certainly doable.
1. Establish Your Emergency Fund
When you’re relying on one income source, you want to be prepared for almost anything. An illness, accident or job loss can quickly cripple the current family income and put you into debt. Establish an emergency fund, so you’re able to deal with the unforeseen circumstances from a leaky roof to emergency car repairs. It would also help to beef up this fund before you transition into living on one income.
2. Practice the Lifestyle
If you’re used to living on two incomes, consider cutting costs now so you can dry-run the one-income lifestyle. Pretend that the other income doesn’t exist, but actually put it away for savings. Also, start cutting costs where you can and live more frugally. Determine what your options are and avoid incurring additional unnecessary expenses. By the time that you start living on one income, you would have enough practice and wouldn’t even miss the extra income.
3. Learn and Love Living With Less
Obviously, your household income is less than those who earn two salaries so it’s essential to tone down your material cravings. Some people even go to the point of living a minimalistic lifestyle and loving it. When you have one income, you may have a smaller home, an older car and probably lesser stuff than those who don’t. But think of the trade-offs: more time with the family and passion projects and the opportunity to improve yourself on your responsibilities at home. Think of it this way: you now have more time to do what matters, even if you have less materially.
4. Make and Stick to a Budget
Regardless of the number of your income sources or how much your household earns, a budget is a must for any financial situation. When you’re living on one income, you feel more financially precarious. However, you can overcome this case by ensuring that you follow a strict monthly budget. With that said, take a look at your monthly spending and how much your spouse earns. You may have to cut down on some expenses to fit everything in. Also, make sure that you don’t overspend by veering away from spending temptations like frequent restaurant dinners and exorbitant shopping. You have to be more conscious of your finances now, and a budget helps you stay on track.
5. Consider a Home-based Income Source
You might be comfortable living on a single income, but do you want or need to contribute in some other ways? Fortunately, you can create additional streams of income without leaving or neglecting your responsibilities at home. Several online jobs pay decent money, while other business models allow you to create passive income from your own little nook at home. You can even earn from your passion projects (baking, crafts and other expertise). These things can go a long way in contributing more to your household cash flow while giving you a sense of achievement.
6. Discuss Finances with Your Partner
The “money talk” is one of the most important discussions you will make with your partner. Being open and communicative about your finances put you both on the same page and keeps expectations level and realistic. These money talks become increasingly more critical as your circumstances change (expecting another baby, moving to a new location or a temporary job loss, for instance) so it pays to keep communication lines open all the time.
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Living off on one income isn’t so bad. It may even be one of the best decisions you ever make for your family. Remember though that it’s a choice and one that you don’t have to live with forever. You may live on two incomes now, on one later then on two down the road and there’s nothing wrong with that.
Every family is different, and you don’t always have to justify the choices that you make to other people. If you believe that living on a single income is best for your family, then do it. You just have to make sure that you are going to be prepared for this at all aspect and be happy with the choice you make.