Dual-income families face a host financial challenges, making ends meet with mums’ and dads’ combined incomes, but single-earner households may have it worse. Not every family home is a two-income residence, but with partners working as a team, there are at least two potential breadwinners under one roof. Because data is available tracking house purchases and other joint spending, analysts and financial advisers tend to focus on the family unit. But with many of the same expenses and obligations to account for, single income households must also find ways to balance their budgets.
Operating on a single income may be a temporary condition, resulting from work interruptions or changes to your family structure. Or learning to budget with one income can also be a more permanent requirement, helping singles and one-income families stretch a single paycheck to cover expenses. Although money is available to fill in financial shortfalls between paychecks, sticking to a balanced budget serves as the only blueprint for maintaining healthy single-income finances.
The Savvy Scot recently explored the budgeting issue on his blog, offering recommendations for working out a sustainable budget suitable for a one-income household.
It’s easier to manage a spending budget when you split your total household cash flow into several categories. Not only do the smaller chunks make your financial habits more transparent, but establishing budget categories is also a good way to prioritise spending.
Work From a Single Account
With money coming in from multiple sources, it can be advantageous to hold it in more than one account. On the other hand, when earnings all originate from one place, The Savvy Scot suggests that maintaining just one account may make it easier for single-income family members to stay on the same page. Married partners with full access to a single account are each able to monitor the funds, adding a layer of oversight that can help manage money flowing through a one-income household.
When shifting from dual-income conditions to a single earnings scenario, it can be helpful to reduce living expenses. Though it isn’t the right solution for everyone, downsizing is one way to cut costs when circumstances change in your life. Kids off to uni? Splitting from your spouse? Pension age approaching? Downsizing can ease pressure caused by these and other lifestyle adjustments, freeing money from your monthly outgoing obligations.
Though each household is unique, budgeting has the same function, no matter who’s doing the maths. An effective budget is all about balance, so you should try committing to anything and everything it takes to achieve equilibrium. Couponing may not be your thing, but if it helps stabilise your finances on the way to a healthier flow, clipping coupons is worth a try.
Certain tasks and jobs around the house warrant professional attention, but performing other duties may be within your reach. Nothing undermines spending plans more than an unexpected bill or sudden expense, so learning to become more self-sufficient is a good way to reduce household expenses and stay within you budget.
Your food spend is a never-ending expense, so it also represents fertile grounds for saving. Doubling-up or scaling meals enables you to produce more of a good thing, for less money. Your freezer provides cash back every time you fill it with economically produced meals that save time, energy, and money.
Change your Perspective
If you’re committed to stretching one income, without sacrificing the things that are important to you, try to Emphasise the value of a good time, rather than good times that have a high value. When spending time with loved ones is your goal, you don’t need to engage in expensive activities, in order to achieve your mission. On the contrary, free events and pastimes are abundant for frugal families seeking affordable good times.
Dual-income households face their own challenges managing money, but the process can be even more vexing when working with a single income. Working out a budget can help keep spending under control, so when you need to make the most of one income stream, start with these tips for establishing a sustainable single-income budget.