Anything from a job loss to the sudden death of a parent can turn a family from a double-income household to a single-income household. Whatever the case may be, suddenly halving the household income can pose many financial problems for most families—especially for those who are already struggling even with two parents working.
Whether you are just barely getting by on a double-income household, suddenly becoming a single-income household poses the need to make a few adjustments. To ensure that your finances don’t become too rocky, here are some financial strategies that you can apply:
Downsize your home
Moving to a cheaper house can take a substantial weight off your shoulders, especially since housing is often the biggest expense for most families. That said, consider selling your current home and buying a cheaper one if doing so makes good financial sense. You can use bank home loan rates comparison tools to see if you will be better off moving to a cheaper house, especially if the reason for becoming a single-income household is due to a divorce or the death of a spouse.
Downsizing your home can also help save you money in other areas apart from the mortgage, such as utilities, maintenance, lawn care, and other common home expenses.
Tighten your budget
After suddenly having to live off one salary, it makes perfect sense to tighten your budget when it comes to food, groceries, clothes, transportation, and other expenses. Create a new budget plan that fits well with your current household income. In doing so, you may have to make several adjustments, such as:
- Not buying unnecessary groceries
- Taking public transportation more instead of driving
- Packing lunches for the family to save food money
- Reducing the kids’ allowances
- Postponing trips and vacations
- Reducing electricity, heating, and water usage
- Taking care of home maintenance on your own
- Getting rid of unnecessary memberships and subscriptions
Although this new situation will come with a few sacrifices, they are worth making if it means you can keep a roof over your head and put food on the table.
Now that you only have one income to work with, you may have trouble adjusting to the smaller cash flow. Unfortunately, car payments, credit card bills, home expenses, and the mortgage don’t stop, leaving you with little to no time to breathe.
If you don’t make enough to keep some of your assets (e.g., vehicles, vacation homes) and lifestyle upgrades (e.g., subscriptions, designer items, etc.), it may be time to get rid of them. Not only will doing this free up money for more important expenses, but some of the proceeds can also help you establish a healthy financial safety net.
Find other sources of income
If the other parent is not working, perhaps they can find other sources of income while staying at home with the kids. Examples include taking on a part-time work-from-home job, taking on odd jobs, starting an online business, or becoming a freelancer. Even the smallest paychecks can be a great help, especially if only one parent is earning a stable salary.
On the other hand, if there is only one parent in the household, they can also try finding other sources of income apart from their main job. Aside from the examples stated above, they can earn more money by working overtime, starting a business on the side, or moving to a higher-paying job.
For an average-sized family earning an average income, it can sometimes be difficult to make ends meet, especially in this economy. With that in mind, do not be ashamed if you are struggling—ask for help when you need to, be it from family members, friends, or local community services.
For instance, if there is no one else to watch the kids or you can’t afford a babysitter, ask your parents for help. If you have trouble managing your finances, seek advice from a friend that is more financially adept than you. Or, if you need more income to supplement your expenses, try approaching your employer for more hours, a raise, or a higher-paying position. The worst that these people can do is say no—so don’t be afraid to ask.
If you want to manage your household on one salary (or are left with no choice but to do so), the key is finding ways to make it work. With these strategies in place, you will hopefully better manage your household expenses, even on a single income.