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There’s no getting away from the fact that managing a single income household is tough.
I know because this is the situation, that as a family of four my wife and I currently find ourselves in and will for the foreseeable future.
With some careful financial planning, we are able to get by and are able to enjoy ourselves, though not as much as I would like.
In this post, I’m to show you how you can manage on one income by following a few simple steps.
After reading the post you’ll have some actionable takeaways that you can implement almost immediately to make sure that managing on one income doesn’t mean that you go without or becomes overwhelming.
A little background on how we became a one-income family
My wife suffered from a heart condition, which wasn’t picked up until her early 20s, and she had been taking medication for it for a while, but we wanted children and didn’t know how that medication would affect the baby’s development, so after a long conversation she made the choice of having an operation to try and correct that heart condition which would mean that she wouldn’t have to continue taking the medication.
The operation didn’t go according to plan and ended up having a pacemaker fitted this along with the cost of childcare made it impossible for her to work and as result, we agreed that she would give up work to look after our little man.
This meant that I would be the only one bringing in an income.
We wanted a second child and in 2020, had a little girl. We bought a lot of clothes that could be used for both boys and girls with our first so this wasn’t a major issue.
On father’s day last year, I found her at the bottom of our stairs and she was blue-lighted to hospital where it was found that she had had a cardiac arrest, by some miracle her heart didn’t give up and she survived.
The pressure on that person bringing in the income
Being the only person that brings in an income is stressful and can have a massive impact on your health both physically and mentally, it certainly has with me.
Not only do bills need to be paid, food put on the table as well as providing everything your children need to develop into well-adjusted adults.
This is all being done sometimes doing a job that you don’t particularly enjoy, while also being the parent and partner that you want to be.
Having that conversation with your partner
There are going to be occasions when you might not be on the same page and it’s important that you are talking about money as early as possible about dropping down to one income to make sure that you can somehow get on that same page.
The conversation could be difficult, especially if one of you is a spender and one of you is a saver or one of you manages the household finances, but it is better had than continuing on as normal and then it is the cause of many arguments.
How do you successfully manage on a single income?
1. Pay yourself first
Paying yourself first is putting a percentage of your income to one side before any of your bills are paid.
This money can then be used in any number of ways, such as starting an emergency fund, distributing it to your sinking funds or investing it.
2. Review your monthly expenses
Companies are mindful of the fact that there is money to be had by offering a subscription service and it now seems you can subscribe to anything whether it’s TV, meal boxes, alcohol or gym memberships.
While these are often marketed as convenient, which they might be in some instances, if you’re trying to manage on one income you have to weigh up whether saving money is more important than having all your ingredients already bagged up or being able to try a new gin every month.
A household on two incomes will usually have more than one car so you might have to decide whether it’s time that you need to consider becoming a one car household.
Managing on one income doesn’t necessarily mean getting rid of a car, but you do need to be mindful of the other modes of transport you often use, do you need to get a taxi when a bus can get you there or can you invest in a good bike and use that for your commute?
Regardless of the size of your family, you’re probably spending more on your utilities than you need to.
Someone might be spending too long in the shower or leaving electronics plugged in when they aren’t in use.
Look for ways that you can cut your utility bills, having a smart meter will help, as will looking to see if you are entitled to any energy saving or water-saving equipment.
Entertainment and family
Who doesn’t like to go out or treat their family?
Being a one income household doesn’t mean that you have to stop doing this, but the frequency in which you do needs to be considered.
3. Track your spending
It’s easy to get carried away with your spending and wonder where your money went at the end of the month.
By tracking your spending and breaking it down into categories such as utilities, groceries, motoring expenses and shopping to name a few, you can see where you might be able to cut back.
Remember cutting back doesn’t necessarily mean that you give up having a life.
In tracking your spending you also have the solid foundation to start creating a budget.
4. Review your budget
If you’re a salaried employee you’ll have a good idea of what you’ll have coming in, this might be a little difficult if you’re self-employed and your income is inconsistent but having a budget is one of the most valuable assets in managing a single income.
Not only does it get your mind focused on how much you’re able to spend and on what, but will also get you into the mindset of checking that you are staying on track.
If you’re able to budget as a couple, this is going to be better overall as you will both know what you have available for the month ahead.
5. Cut out your brands
There are going to be some brands that you aren’t going to or want to cut out and there’s nothing wrong with that, we (my wife) won’t compromise on the baked beans we buy.
Some supermarket brands are just as nice and healthier than their branded counterparts, it is just a matter of finding those swaps that you like, what’s the worst that could happen? You decide you don’t like them and go back to your brands.
Start small, you don’t want to do a full shop of a supermarket’s own brands only to find that you don’t like most what is in your trolley.
6. Have an emergency fund
An emergency fund is a pot of easy access money that you have available to you should something unexpected happen, such as losing your job, putting your car into the garage or having to call someone in to do some maintenance around your house.
The general consensus is that you should have around three to six months’ worth of expenses in your emergency fund.
7. Start a sinking fund
Unlike an emergency fund, a sinking fund is a pot of money that you put aside for those expenses that you know about, such as Christmas, a holiday and your usual car expenses such as road tax and insurance.
We have sinking funds for just about anything in our house from Christmas dinner, to presents and car payments, to name a few.
8. Ensure that you have adequate life insurance
Obtaining life insurance is often something that we overlook and wish we had when it’s too late.
I can’t stress the importance of having life insurance enough and this is true even with two incomes.
What would happen if you were to fall ill and were unable to work or something happened to you where the income that your family replied on is no longer there?
Having life insurance not only ensures that there is money available but all of those things that need paying for should the unthinkable happen can be without those you have left behind having to find the money from somewhere.
9. Ensure that you are receiving all you’re entitled to
You might not be eligible for a lot but as a one-income household, every little helps.
10. Look for a way to maximise your income
If you’re employed, the most obvious way of maximising your income would be to ask for a pay rise.
But there are other ways to earn more money that doesn’t impact time with your family such as selling your unwanted items, creating digital products and freelancing.
If you’re able to maximise your income as a couple, this can also help you achieve any financial goal that you might have together, quicker.
11. Review how you spend
I was told that if you can’t pay for it in cash then you shouldn’t buy it.
Nowadays it doesn’t seem to matter if you can’t afford something because you can get it now and pay for it later.
Loans can be obtained from your bank or one of those companies that charge extortionate interest rates.
You can apply for a credit card with companies offering to increase your credit limit because you are a good customer.
More recently, UK consumers are turning to buy now pay later (BNPL) companies such as Klarna that allow them to spread the cost of their purchases, sometimes allowing payment to be made in 30 days, over three instalments or over a period longer period of time.
When you are on one income, knowing how you make your purchases and monitoring how you spend goes a long way to ensure that you keep on top of things.
I use a credit card, but pay it off in full when the statement arrives and will sometimes use a debit card on an old account for fun spending.
12. Use the 30-day rule
The 30-day rule is about giving yourself breathing space before making any purchasing decision.
This time gives you enough space to think about whether you need that item or not.
If 30 days sounds too long, why not try a week or even 24 hours.
13. Buy what you need not what you want
Who doesn’t like to buy shiny new things for themselves or loved ones once in a while, when you were on two incomes this might not have been a problem and it still doesn’t have to be because you’re now on one.
As mentioned above, start a sinking fund and use this to pay for those items that you know are going to need replacing, then when the time does come that your oven, washing machine or whatever else needs replacing you have the money available for it.
14. Pay off debt as quickly as possible
As a single income household you might have had to get a loan or put something on a credit card as a result of an unforeseen emergency, such as your washer deciding it doesn’t want to work or your car needs a fortune spent on it to keep it on the road
Paying off the minimum on these debts not only incurs interest but means that the sum that you’re paying off isn’t being used to ensure that your household can withstand any storm that might come its way.
15. Start meal planning
Before doing your shop write down what you are going to have for the week.
This way not only are you going to have an idea of what you need to make these meals, but it will also give you the opportunity to check your cupboards to see whether you have any of the ingredients already, therefore saving yourself some money at the supermarket.
If you haven’t guessed by now, I think that it is possible to manage a one-income household, but it certainly isn’t easy and without its sacrifices.
So long as you have a firm grip of where your money is coming from and where it is going then there is no reason why you shouldn’t be able to manage on one income.
Unfortunately, this isn’t going to be the case for everyone and some will struggle to manage on one income it is important that if you find yourself struggling you find the support that you need, financially and mentally as both have an impact on each other.
Where to find help if you’re struggling with your finances
You shouldn’t try to cope with managing one income alone so talk to your partner about how you are feeling, but if you feel that this might be too overwhelming there are organisations that will be able to help, including:
- Can a financial coach easily help improve your finances? - 26th January 2023
- Is it worth being a member of Tesco Delivery Saver? - 16th January 2023
- 9 Ways to overcome the Christmas financial hangover - 27th December 2022