There are a growing number of households who are slowly transitioning into a single income family. It may not always be by choice because but some do prefer to live off on a single income. This might sound outrageous especially when you start to factor in all the debt obligations consumers are racking up these days. However, there are a lot of reasons why people and families go down this route.
Why transition to a single income
One of the first things you need to understand when it comes to a single income family is having an understanding of why people willingly choose to do it. Here are a few reasons why people opt to work with a single income in their household.
This is one of the biggest reasons why married couples who each have jobs would willingly decide to live off on a single income harder when they have been working hard at it even before they have met each other. e. It is not an easy decision especially when they both have careers that they want to pursue.
However, when they start to have a bigger family and kids start to come into the picture, priorities will start to change. There are parents who would willingly give up their career and rearrange their priorities in life including their career and jobs. This is where choosing to give up a career to take care of kids can come in.
Death is a natural part of life and it can happen without any warning. When it happens to your husband or wife, you are suddenly thrust to a world of firsts. This includes juggling a single income family If you have kids, it becomes one of the things you need to be good at fast. There will be a million things you will be doing for the first time but this will have a direct impact on your finances.
American Psychological Association shares that as high as 50% of marriages in the country end up in divorce. Subsequent marriages do not even fare better. Once this happens, you are then forced to fit all your expenses into a single income until you either move forward or adjust to your new situation in life.
One other instance where you might have to rely on a single income in your family is when you or your partner gets sick. It can be for just a few months or at times, longer than that. It is not easy getting sick because apart from losing income, you also add a significant expense item in your budget. This can put a heavy strain on your finances.
What to expect
Now that you have a few ideas on why you would be in a single income scenario with your finances, here are a few ideas on what to expect would come next.
Changes in the household budget
One of the most evident changes you would notice in a single income family would be in the area of your household budget. As you try and cover for all your expense with just a single income, you might find it hard to pay for all your expenses on a monthly basis. If ever, you might have to make do with living from one paycheck to another for a few months until you get your bearing.
Changes in your retirement planning
It is important to plan for retirement and the key concepts you need to understand is doing it early in life and putting in as much as you can into your fund. Once you start to live with a single income family, your retirement approach could drastically change. This would all depend on what you are left in life to work with.
If you are managing a single income in your family and you have a lot of children to take care of, it would really be quite a challenge to provide for their needs while planning for your future. It could already be a challenge when you still had a partner to work with raising the children. Now that you are all alone, it would require you to make some changes with the way you save for your golden years.
Changes in goal setting
Much like how your retirement planning would change, you might start to notice that it will affect all other goals you have in life. It can ripple out to anything from your goal of paying down your mortgage loan early, saving up for a college fund for your children, or even to that vacation you were planning at the end of the year.
How to manage with smaller income
At this point, you now have an idea the most common causes of having a single income family and what it can do to your finances, here are a couple of things you can do to help manage your finances better.
Look for passive income opportunities
This is one of the best ways to start earning extra money without giving up too much of your time. This usually comes in the form of investments where you make your money work for you. If you get expect some insurance money to come in or you have some amount to spare, try investing it to make it grow over time.
Once you do decide to invest some money to have a passive income, one of the things you need to look into is the risk. This has a direct relation to how much you can expect to earn with your investments. Simply put, the riskier the investment would be, the bigger your potential returns can be on your investment. This means that the lower the risk you take, the lower the possible earnings you can expect from your investment.
Explore income-positive hobbies
Income-positive hobbies are a great way to help you augment your income especially if you are struggling to make ends meet. It also gives you the opportunity to take on and do something you that you love and maybe even polish your skills. You just have to look at your hobbies and find a way to earn from them. There are a number of ways to go about this
If you love reading books, why not look for a job where you can review books. You get to read a lot of books and make reviews while earning from it. If you love to write, you can get freelancing jobs and create the articles you want. It is also possible that you have the talent to create artworks. You can use this and create a portfolio and talk to the business establishments near you. They might have some brochures or other needs they can outsource over to you.
Start with a frugal lifestyle
As you start to live with a single income in your family, it is crucial that you guard your expenses better. One of the best ways to do this is to take on a frugal lifestyle. This might have a negative connotation for some people because they already think of the extreme actions some people take to save money. Some dumpster dive while others try to live off on ramen and noodles for months to save on food costs.
Frugal living is far from these extreme actions and is basically more concerned with a better quality of life for people. You do have to rein in your expenses but it is not meant to make you suffer. Frugal living does not prohibit you from buying food, it just means that you have to buy only the ones that you need. Check what you have at home first before heading out to the grocery and buying supplies.
Frugal living also means looking for ways to save money. It can be buying food and even supplies in bulk to save money. You can also start to cook your food in batches so you have them prepared throughout the week. It is just a matter of heating them up every night so you save time and lower the chances of ordering take out. It can also be brewing your own coffee every morning rather than lining up for a signature one in a coffee shop.
Having to manage a single income family is not a walk in the park but there are a few ways to make it work for you. You just have to make sure that you find the one that works best for you.