You didn’t plan it this way, but somehow you find that now your family is forced to live on just one income. Whether it’s temporary or a new way of life, learning to live on a sole income can present challenges. The good news is that many people live life this way and do it successfully.
Budgeting
A budget is essential to sustaining a healthy financial future. It will give you not only insight into where your money goes, but also the changes you need to make to pay your bills on time with one income. It also identifies exactly where you spend your money, allowing you to cut back on frivolous expenses. Additionally, it gives you a way to afford large ticket items or a vacation–something you otherwise would not have the ability to do.
Finding Extra Money
With just one person able to work, you may need to have that person take on a second job for the short term. And, if the reason one person isn’t working is due to a work-related injury, and they have a case pending with a worker’s compensation lawyer, it can take months, even years to settle. Until that happens, the person who can work needs to earn as much money as possible.
Reducing Debt
Now that you find yourself living off possibly half of your family’s previous income, the debt you have feels excessive. The best way to survive and enjoy a good quality of life is to place the focus on reducing your debt. Thankfully, there are several different approaches you can use. If you have a mortgage and equity in your home, you can refinance it to reduce the monthly payment and use the cash received to pay off things like car loans, credit cards, student loan, and other accumulated debt. If you don’t have a mortgage or any equity in your home, you can apply for a personal loan to help pay off some of your outstanding debt.
Reeling in Your Spending
Now that you rely on just one income, accounting for every penny you spend is critical. Spending recklessly can take money away from your vacation or necessary repairs to your home or vehicle. Luckily, there are many ways to cut back without extreme sacrifice. For example, let’s say you purchase coffee each morning on the way to the office. Instead of doing this daily, makes it a treat for Friday’s only. The same goes with eating out. You don’t have to give it up, but obviously, you can’t dine out as often. Make a few small changes to your spending habits and you can find the extra money you need to live right on one income.
Emergency Fund
When you only have one income, you need to have money set aside in reserve to cover unexpected expenses. If you do not plan ahead, any minor repair can quickly turn into a major setback that can cause you to falter with your monthly obligations, lower your credit score and even put you in a position where bankruptcy feels like the only thing you can do. You can start out small with just a few dollars each week and then gradually increase the amount as your debt reduces and your salary increases. Living on just one income isn’t ideal, but it can work. If one person suffered an injury to their knee at work and they are no longer able to work due to the pain and now limited mobility, cutting back on expenses, reducing your debt and establishing an emergency fund are steps in the right direction.
