Sometimes it becomes necessary for families to change their lifestyle and begin to live off a single income. Here you’ll get tips and avice to make the transition to living on a single income easier with Payday Loans Net.
How to survive on one income
- Set up an emergency fund
- Create a budget so you can see the real figures
- Train yourselves to cut out uneccessary expenses
- Pay off your debts
- Find out what taxes you don’t have to pay, and what benefits you can receive
- Use your spare time to save on quick-fix costs
Preparing to live on a single budget
By building up an emergency fund to help you with any unforeseen expenses once you are on a single salary, you will have less anxiety and feel better about this big change in your life. Just by knowing that you can cover expenses when an unexpected illness or redundancy arises will keep you sane. The ideal time to start building an emergency fund would be while both salaries are still coming into the home. Ideally, start it by taking 25% of each wage earner’s salary for the 6 months before the planned change in living circumstances.
This will be a sizeable lump out of your monthly budget so it will give you an idea of how it is to live each month with less money to spend. It will be great practice for when the time does eventually come. It will mean cutting some luxuries out and trimming down your usual living expenses, but it will act as a taste of how things will have to be with less money in the future, and you will be glad of the practice run before the real thing comes into being.
Create a new monthly budget
Make sure that you start calculating your new budget well before the actual event so that you can see beforehand how it will be to live on less money once all your bills have been paid. By knowing what you have left over after accounting for your living expenses, the transition into your new way of life will be less stressful. You will have an easier time juggling finances once the salary has been lost. Remember that you will no longer have work-related expenses to pay such as travel costs, dry cleaning, lunches and child care, so these savings need to be factored into the new budget. It is important to include savings plans for retirement and not to let this goal slip.
Cutting costs where you can
Now that you have set a budget and know how much money you will have to play with it is a great idea to start cost cutting your living expenses. Failure to do this could mean that you are overspending and could need payday loan companies to see you through difficult months if your savings were locked away. Make a list of all the things that add up through the month such as gym memberships and pay TV and see which items you could manage without.
Ask yourself what you will have to sacrifice to live on a single salary and make the necessary adjustments. It may mean trying out new food brands that are more cost-effective and giving up meals out. You may need to sell a car or move into cheaper accommodation that could take months to sort out, so it is a good idea to start this well before the planned change.
Here’s what we’ve learned so far
- Sometimes people need to give up work and live on a single income
- Failure to plan and adjust your lifestyle could lead to taking payday loans
- An emergency fund can make the change easier safe in the knowledge that you have a pillow to fall back on
- For 6 months before leaving work, the couple should save 25% of their salaries for this cushion
- Work out your new budget without scrimping on retirement plan savings
- Start to cut living expenses and see where you could change to save money
- Supermarket shopping could be cheaper when you switch to unbranded goods
Pay off your debts before living on a single income
Before you go to living on a single salary, it is important not to be weighed down by bad debt. Debts that were once good and affordable can soon become unmanageable once your income is less. You could probably manage the change if you were not spending a big chunk of your income paying off high-interest credit. Before you consider making any big financial reforms, it is essential to make sure that your debts are paid off. Even if it means that you have to put back your target starting date. By applying the cost cutting tips that we mentioned before you will be able to save more money to get yourself in the black even faster.
Don’t pay the taxmaster more than you have to!
If your household were no longer earning as much money as before, then you could be better off. It is important to seek professional help from your accountant to see where you could start saving some money by being liable for less income tax. Financial advisers will be able to show you how you could save more money on tax with a lower income as each family’s finances are unique to them.
Use your spare time to save costs
When you are working full time and juggling work commitments with childcare and housework it is very easy to fall into the trap of ordering takeaway food to get a quick meal on the table. Now that you are no longer working you will have the time that it takes to have a great economical shopping budget and the time to cook for yourself which will save a lot of money. Other people in your employ from decorators to gardeners can be made redundant as you can do most of these things yourself as you will have time.
Which partner should manage the household finances?
The question as to who should manage the finances when you are a one income family will depend on how you work best as a couple. Take time to decide on the best option. Some families decide that the one who has more time is better suited to make their financial decisions while others continue to make their choices together. You will need to adjust your current accounts and either maintain a joint current account or for easier tracking some people prefer to keep two linked current accounts. The most important thing is that the non-working member of the family has access to the family money.
Living on a single income – Conclusion
It is possible to stop working and survive on a single income if you have planned for it and made some adjustments. Once some families take into account the amount of money that they spend on getting to and being at work they find that they are not as badly off as they may have thought. Just by being at home a family can save money on the cost of childcare and take-away food that has to be bought because working full time and managing a household is sometimes challenging to organise properly. There are plenty of extras that people would give up if money were more scarce.
Making the change will be less stressful when a couple has planned in advance and set aside an emergency fund. If there are no savings to cope with an unexpected emergency, it would be easy to fall into debt and have to get to your wage day advance login to pay bills. One of the most important things to do before trying to live on a single income would be to clear off any high-interest credit and other debts. This is essential even if it means a delay in the time that you had planned to retire from work. Making some sacrifices but above all careful planning is the key to surviving on a single income.