There are several reasons why you may find yourself faced with living on a single-income. You lost your job due to the pandemic, you or your spouse went back to school or are pregnant and want to stay at home to raise a family. The good news is that regardless of the reason, there are ways to live on a single-income.
Lowering Overhead Costs
Overhead costs such as rent or a mortgage and utilities are necessary. However, you can reduce them. If you own a home and have equity, interest rates are low allowing you to lower the monthly payment. You may want to look into refinancing or even buying a new home with USDA financing.
Changing out standard light bulbs and replacing them with energy-efficient LEDs, updating a thermostat to a programmable model will help to lower usage.
Bundling Services and Refinance Auto Loan
You may have homeowner’s or renter’s insurance and an auto insurance policy with two separate companies. If you combine them with the same carrier they will reward you for loyalty and give you a discount. This can save you a few hundred dollars each month. Companies that provide cables, phone and internet services will also reduce the price for bundling the services with them. If you currently have a loan for a vehicle, now’s a great time to refinance a car loan and enjoy a low interest rate.
The Household Budget
When you live on a single income you need to manage money wisely. A household budget puts you in control of your money. It opens your eyes to your total annual expenses bringing about a new awareness to accumulated debt. It also lets you allocate money to things such as a vacation, college, major home repairs, and your retirement.
Emergency Fund
You may think it’s impossible to create an emergency fund when you only have one income. However, it’s not true. It’s because of your finances that an emergency fund makes sense. If an unexpected expense comes along, how will you pay for it? Without savings, you’ll need to borrow money from your bills to cover the expense. As a result, you’re short on money to cover all your monthly expenses. Start by making small deposits of just $10 to $20 weekly. As you reduce your debt you can gradually increase the amount.
Saving Money on Food
Food shopping can consume several hundred weekly depending on the size of your family. Thankfully, there are ways to get everything you need for less. Gather the weekly flyers from the local supermarkets in your area. Unbelievably, they don’t always have the same items on sale. Create a list and then mark next to each item which store has the best price.
It’s also smart to give the store brand names a try. In most cases, they provide a similar quality or taste as the name brands for much less. Lastly, don’t forget to use coupons when available for the items you need. However, it’s important not to clip a coupon that doesn’t apply to your list or you’ll spend more than necessary for that week.
Eliminate Frivolous Shopping
There are things you need and things you want. The needs always supersede the wants as they are necessary. You can purchase the wants in time by saving the money to pay for them with cash. This way you won’t use bill money, run up credit card debt or pay a penny more than the original value.
It’s not easy going from a two-income household to one. However, if you create a household budget, eliminate wasteful spending and find ways to save money on both essentials and non-essentials without compromise, you’ll live life comfortably.
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