There will be a lot of budget adjustments when you transition from a dual to a single-income household. It is basically cutting your household income almost in half. Thinking about that concept can really make you cringe in terror and stop you in your tracks. Why would you want to lower down the amount you bring in every month?
Reasons why you choose a single income household
Choosing to convert into a single-income household is no easy task. If given a chance, it is always better to have two, or even more sources of income coming into the budget every month. However, there are a few valid reasons why couples would choose to cut their income down every month. Here are a few of those reasons so you can understand them better.
Having children
Once couples have children of their own, there are budget adjustments they have to deal with and one of them is choosing to stay at home. This is usually the biggest reason why couples would decide to work on a single-income budget. Apart from having to save on childcare costs, parents normally want to be present in the formative years of their children.
This is the biggest reason why Americans choose to have either the father or the mother at home with newborn children. Vox shares that there were 59 births per 1,000 women aged 15-44 in 2017 and 2018. A number of these women is already thinking of staying at home and raising their children correctly in exchange for a second income at home.
Moving around for work
There are instances when people would have to move around the country and even to other parts of the world for work. During these instances, it might be difficult for their partner to retain their job if the family has to move around a lot. This is one of the reasons why people would consider a single-income household and make budget adjustments to make it work.
Medical situations
If one partner is extremely sick and would have to stay home and recover, maintaining their job does not become a priority. Getting better is the priority and that can mean resigning from work and diverting all their energy to recovering. This is normally a non-negotiable circumstance where the priority ships from earning money to improving one’s health. Remember that your health is an important aspect of your life.
Budget adjustments to make it work
Now that you have an idea why some couples would choose to have a single-income household, there are a few things you need to remember to make it work. It is a tough decision to make, regardless of the reason why you have to do it. It can put your finances in a really tight spot especially if you did not make any preparations beforehand. Here are a few things you can do to help you adjust better to it.
Planning ahead of the change
If you know that you will be working on a single-income household in the future, you need to plan ahead. Take your mortgage loan for example where you have to make sure that the monthly house payment can be covered by a single income in the future. This can also be the case for your car loans and even the number of vehicles you need.
The idea here is if you believe that you will be working on a single income down the line, plan accordingly with your long term-payments. There are times that couples decide to cover all their expenses with one income because they want to use the other and save for future needs such as retirement money.
Pay down as much debt as you can
There will be a number of budget adjustments when you start living off on one income and one thing that can help is paying down debt obligations. If you can control your debt payments, most of your income can go into items that you need at home. It can be used for food, utilities, and even saving up for retirement in the future.
You do not have to divert all your income to pay down big-ticket items in your budget. It might be challenging to pay off the house in just a few years. Your student loans could also take a few years until you send that last check. What you can pay down are the small ones with high-interest rates such as your credit card debt. Once you pay it off, manage how you use it in the future so you do not put your income in peril.
Find ways to lower your expenses
When you are looking at budget adjustments from a single-income, it is a good idea to try and lower down your expenses in your budget. If you have a comprehensive budget, take a look at that list and start identifying the ones you can adjust down. Not all of them can be lowered down but there will be a few you can work on.
Take your food budget for example where you could give up ordering take out and cook food more often. You can even make it a family event where the children help you out in making the meals. If you are not using that gym membership anymore, cancel it and start exercising at home. You can even go out for a run as a way to exercise and have your alone time.
Understand that there will be sacrifices along the way
There will be a few sacrifices you need to make when you are living off on a single income. It can be in the form of driving older cars around and even taking fewer and shorter family vacations. This is just part of the whole journey. You can use this as motivation to live a frugal life so you can find your creative side and still have a full life.
Rather than trying to book a vacation for the whole family, why not pitch some tents in the backyard with the children? You can look for a safe way to have a campfire, roast some marshmallows, and even share some stories around. This can be something the children will remember for a long time and an activity you can do for less money.
Look for extra income
Even if you are staying at home, it does not mean that you cannot earn money anymore. There are a few jobs you can do right in the comfort of your own home. There are online jobs you can pick up for a few hours every day. The additional money you can bring in to the household every month can be a big help in managing your finances at home.
If you start to live on a single-income household, there are a lot of budget adjustments you need to factor in but it is doable. There are a number of things that will change and this new lifestyle will require a lot of sacrifices but it will be worth it in the end. If you are doing it because your husband or wife needs to recover her health or if you have a newborn baby and want to spend time with your child, the sacrifices will be worth it.
