Back in the old days, the salary of one person was sufficient to run a household, pay for holidays, and to repay loans. And now, well, not so much. People these days struggle with two salaries. But this doesn’t necessarily mean that every household has more than one earning hand. It’s even more difficult if your life suddenly boils down to living on one income instead of many. Could be a financial crunch – loss of job, sickness, etc. So, how do you manage funds if you only have one source of income at your disposal?
Here is how:
We’ll warn you at the outset to be prepared to take some tough decisions. Life won’t be particularly rosy or comfortable on one income, but you will be financially secure.
Cut Expenditure To Half
You must halve your expenditure if your income falls from two or more to just one. And, you must take steps to live on just 50 percent of that one income. The other half should be used to repay debts and create a safety net of sorts. It pains us to say this, but give up the little luxuries of life – coffee, expensive dinners, etc. Start brewing your own cup of coffee at home. Remember, you have to be doubly prepared for emergencies, and you also have to pay your debts. So, adopt practices like taking public transport to work, excusing the cook, and only buying the essentials. Yes, the very basic.
Rejig Your Debts
Debts have to be paid no matter if you’re a Lannister or not (Game of Thrones fan? No?). The more you delay, the bigger it’ll get. If you are using 50 percent of your income for bare essentials, use the other 50 to pay down loan EMIs and Credit Card bills. If the ‘one-income situation’ is temporary and you are finding it extremely difficult to afford multiple EMIs, speak to your lender. Request them to excuse a few EMIs till you are a in a good position to make payments again. But try your best to not neglect the debt. It will add to your financial woes.
Another scenario might be that you and your family are taking a conscious decision to move to one salary for some time. May be bringing up the kid, education. In this case you can plan ahead of time. Reduce your Credit Card bills and pay up as much of your debt as you can before taking the plunge. Try to keep you monetary obligations as few as possible.
Having a safety net becomes imperative if you are living off of one income. It’ll absorb the shock of any financial jerk you might receive. Hence, if you have an emergency fund going from the good days – DO NOT TOUCH IT! Don’t borrow from this corpus to pay for your essential shopping. Leave it untouched for extreme emergencies. And, if and when you do borrow from this corpus, replenish it immediately. When you feel like a damsel in distress, an emergency fund will be akin to a knight in a shining armour.
Scout For Deals
If you are going to be fending for yourself and your family with one income, then you are going to have to get smart. Just pinching pennies won’t do the job. Each time you are in need of something, scout for deals and discounts. Explore grocery stores other than your usual one and see if you can get things for free or at discounted rates. How about buying fruits and vegetables from the hawkers or from wholesale markets? This will allow you to buy your regular quantities of food for a lesser price. Do the same with all your other basic-necessities shopping.
Another place you can get smart is with your bills. Be mindful of your electricity expenditure, phone bills, TV bills, etc. Eliminate all that you don’t need. You can get a cheaper phone package, cut some paid channels and use electricity wisely. A wise money manager spends smartly and saves.
Stop The Imitation Game
Often, our financial woes stem from our urge to imitate the money habits of others. We see our friends and neighbours and then we want to live and spend like them. Sometimes, we even follow the same investment and savings strategy followed by our friends. While this may work well in some cases, it may not always. If you are grappling with a one-income lifestyle, it’s of paramount importance that you evaluate your needs independently. Don’t follow what others are doing. Judge your condition, take stock of the matter, and then take decisions that work the best for you. You can always borrow ideas and solicit suggestions, but be sure that they work for you.
Additional Reading: Simple Money Management Hacks
Living on one income requires sacrifice, patience and smarts. Combine the three ingredients in the right amount and you shall be able to avoid a fall into the deep blue sea. If you find yourself in dire need of money, get a Personal Loan at BankBazaar. We’ve got your back!