5 Money Tips For Single Income Families

Tuesday, January 31, 2012

Well-paid executives are not the only people who bring home the only paycheque for the household. While living on a single income might not be easy, many families are learning to do so for a number of different reasons. Instead of seeking to replace a lost job, some mothers are staying home with the children and changing their approach to meals and housework. Substantial money savings is realised when daycare bills and restaurant expenses are eliminated from the household expenses. In the early stages after shifting to one income, there are some adjustments that must be made. And we hope that these five basic tips will help you organise our finances to get by on a single income.

Follow These Tips for Living on One Income

1. Establish a budget – All expenses that will be incurred over the course of an entire calendar year should be placed into a detailed budget. A portion of insurance premiums and other bills that are not paid monthly should be set aside each month. Weekly budget discussions should be conducted to keep a tight rein on every penny and cooperation must be freely offered to prevent conflicts about expenses. Bank accounts must be monitored closely to stay abreast of the ways money is used. Cash can be placed in envelopes to force spending restraints on each major category, such as groceries and clothes.

2. Shop creatively – A wish list is a useful tool to delay purchases that might not be necessary. Whenever an item is desired, write the description and price on the wish list and wait for 30 days. This method prevents spontaneous purchases that can strain a tight budget. Alternative sources of goods and services are available for those who wish to save money on every purchase.
  • Deals – Weekly flyers, coupons and sales are available for most retailers. Most purchases can be made for less money than the full retail price. Use of shopping lists will enable the household to stay within the budget.
  • Second-hand – Thrift stores, online classified ads and garage sales are great sources of nearly new items in almost any category. Frequent visits to each of these sources will yield remarkable bargains.
3. Entertain friends – Cooking at home and inviting friends and family over for an evening of free fun can be one of the most rewarding aspects of life. Large gatherings are the perfect opportunity to have creative “pot luck” suppers where everyone shares their favourite foods with those present. Children enjoy spending time with friends and learning to play board games and outdoor games. Extended families that spend time together enjoy multi-generational interaction that builds social skills in the children.

4. Forget the "Jones's" – Attempts to keep up with the lifestyle of others is exhausting and unproductive. Specific financial goals will established the guidelines for the household. Material goods will take a different role when the family is more interested in raising great kids instead of acquiring the latest stuff.
  • Similar friends – Other single income families will have similar priorities and restraints on their ability to spend money. Creative people are inspiring to others who know that free fun is still fun. Some former coworkers and very wealthy friends might wander away, but the family goals will come into focus, and new friends will come.
  • Contentedness – Surviving on a single family income requires developing deep contentment with the current situation. Every purchase should be evaluated against the actual need that has been presented. Acquiring goods through creative shopping expeditions can be one of the best ways to teach every family member to save money.
5. Emergency fund – An amount equivalent to six months of income should be saved in an emergency fund. The need for this fund cannot be overstated because of the lack of a safety net that would be available if a second income existed. Unexpected costs that arise can be paid from this fund to avoid incurring debt. After the expense is paid, the fund can be replenished over the next few months.

In Conclusion

Debt-free living is embraced by many families who are living on a single income. Debt service weighs on the family budget more than any other monthly expense. Active money management involves close evaluation of every expense. Old habits must be broken to stay within the limits presented by a single household income. Honest communication and proactive decisions will prevent shortfalls at the end of the month prior to arrival of the next paycheque. Multiple budget reviews during the month will reveal how money is used for discretionary expenses. Adjustments will be required to align every expense with the household priorities.

Andy is the co-founder of the credit card comparison website where he contributes reviews, guides and blog posts. Outside of work, he leads a busy family life and enjoys travelling.

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