Depending on one person’s income with kids, it is considered a luxury rather than the norm in the 21st century. However, due to the changing shifts in how society functions, it is essential to note that a single-income household might be making a comeback.
While stay-at-home parents do not account for total GDP, the estimated value they bring is about $170,000 per year in terms of taking care of dependents. It also allows your family to strategically determine where to spend the most valuable asset: money.
Anyone on a limited income can tell you this: every dollar that comes in, it’s an expense that is traced continuously.
It is no surprise to many of us that living on one income is a bit of a paradox: it’s desirable yet out of reach. For many parents, though, this is the reality that they have to do for their lives. Is it the end of the world? Not. Instead, it is an opportunity to maximize what life has to offer and figure out why you are in the position that you are in entirely.
If you are living on one person’s income, the chances are that you have heard:
- Get a second job during your free time!
- Your significant other should contribute more to the household!
- Create a project that makes passive income.
So how do you go about ensuring your single-income household isn’t living paycheck to paycheck? What can you do to ensure that your situation’s current solution doesn’t become tomorrow’s problem for your family?
Here’s the good news: with enough setup, a little time, and effort, this worry will be free from your mind. To find ways to succeed in the long term, you will need to look at what you are spending your money on and what problems you are creating in your life.
You can solve most money problems with less worry, and more awareness than most of us realize.
There are many different budgets, all the rage from optimizing your credit card deals to a frugal spender. But few budgets can work with your income level and help you figure out how much money we have as a household.
This choice is the first step in determining how much money your family has available to spend. From there, it goes to how much money you have at the bank, what your credit cards are, and how much you can save on items. But to achieve your anticipated financial independence, you need to figure out your budgetary needs first and foremost.
Working with a single household income, you are all conscious of how much money comes in every paycheck and what is taken out. But are you also consciously aware of what money is “wasting” every paycheck cycle as well? Use this template to look at your money:
|Paycheck – biweekly
First, list out how much you make per paycheck period, your checking and savings accounts. If you want to take a step further, you can also add a line where you count how much you have cash on hand. This way, it can give you a better picture of how much money you are worth and what you can use to spend your money wisely.
You may use the rewards that you earn from your credit card as part of your asset; however, do not include the new credit limit of your credit card—a credit card I still have a loan.
Loans are meant to be paid back at an additional cost to you and your family. So while you may have a thousand dollars in your credit limit, you could also owe a thousand dollars in the near future.
These expenses that don’t change stay the same from month to month. Fees, as listed above, don’t typically change as the month progresses.
According to the law, it also helps keep track of when it increases because these accounts require notice for the amounts to vary. It is strictly prohibited to improve one’s bill without notice and will result in unfair practices. So be sure to take a look at your bank statements to see what expenses stay the same. If any of these above does change, consider reaching out and looking through the agreement you signed with this service.
It is against the law to change your rent price, for example, without signing a new lease. Now, these expenses will change from month to month. So it’s essential to keep these in mind as you give it your best estimate.
If you want to get a better average opinion on this, I recommend that you go through your bank statements. While you may be on one income, it is essential to note that your bank statements can help you provide the right starting place for where your money is going.
Most of the time, we tend to spend money on things that we think we need vs. what we need.
Once you feel that you have a good estimate of how much this costs per month, this is when the fun begins. You can now determine how much needs to be spent vs. what you are spending for fun.
Being in a one-income household takes discipline, but it can be done if you know where all the money is going.
The Final Task Now, add up all of your expenses and total them. Once you have done that, then do the following equation: (Income + savings account + checking account) – (fixed + variable expenses) = Total Now, this budget template’s goal is to have $0. So if you are in the negative, then it’s important to keep reading. Don’t fret yet, and don’t believe that you need to start a side hustle to survive. Instead, let’s fix the problems that can be fixed short term, then we will work with you to fix some long-term problems. We have your back.
If you want something that goes more in-depth and perhaps offers you a better view of your behaviors relating to money and how your family spends it, then this budget might be for you! This system requires the following things:
- Bank Statements from the past two years
- Two years of tax returns
From there, the first thing you will do is go through your tax return and write down your AGI or, rather, adjust gross income on an Excel spreadsheet. This is your total income from the past two years.
Once complete with that, you will get your bank statements out and type in the total cost of each year’s expenses. From there, you can look to see what you and your family are spending on a one-person income and decide from there. You can also take the income and the expenses to total them out.
This way, you can see if you generate a profit or loss for how you and your family spend money. This is what financial advisors do when working with clients.
It helps to see the big picture of where all the money in your life is going.
If you think that these budgeting systems are not for you, I would advise you to check out these related articles to help you find the budget you need to fit your needs:
- Best Personal Finance Books Give Advice That Everyone Needs to Read
- How To Create a Budget in 3 Simple Steps
2. The “easy” essentials
One of the first things you can do right now is to see if your bank has a high-yield savings account. If you already have that, then stick around to see if your financial institution has you covered. If you do not know what I am talking about, no worries.
A high-yield savings account is a savings account that yields interest more than a typical savings account. CIT Bank has high-yield savings accounts of at least (as of now) 0.45% or more. What does this mean?
Say you decide to deposit $100 into your savings account for the month. Do you expect to make a few dollars on this return? If you automatically said: ‘No,’ then consider opening up a bank account with the bank listed above for a savings account. And the best part? Compared to national banks like US Bank or Bank of America that require a balance of $5,000 to avoid fees, this bank does not charge any additional fees if you put in $100 monthly for the savings account. However, it is essential to note that you do your research on where you would like to have money that can be ignored.
An excellent example of this is money that needs to be left entirely alone and is not easily accessible to spend. So, for instance, consider opening up a bank account to have money meant for emergencies that won’t require instant payment. One of the many things about money is that when many of us have it, we genuinely think that we shall lose it if we don’t use it. This is not true. The best thing you can do is consciously decide where you would like your money to be for your one-income household if things throw a wrench in your plans.
It’s completely free and easy to set up online. Additionally, it can help earn a couple of dollars instead of just pennies every year while you work on building your family’s nest egg.
3. Using your credit cards like a pro
Here is a startling fun fact, if you have no debt and only ten dollars in your pocket, you are considered wealthier than most individuals. How do you eliminate debt when you only have one income to work with entirely? Here is what you can do:
First, pay off your credit card bills aggressively. Making those small payments on it will not get it to shrink slower anytime soon. And that interest can be unforgivable if you ever miss a payment. Credit cards are created for one purpose only: short-term loans to be paid. That’s it. Now, as a family on a small income, you cannot immediately expect to pay off all of the bills with a checkbook or debit card. For example, say you owe money on three different credit cards:
- Credit card 1: $200
- Credit card 2: $300
- Credit card 3: $1,500
Now, to set up a payment plan, see how much money you have set aside for paying off your credit card bill. If you have set aside $500, consider a payment plan per month in the following order:
- Credit card 1: Payment of $75
- Credit card 2: Payment of $75
- Credit card 3: Payment of $350
You might be thinking: wouldn’t it make sense to pay off the first two? Not necessarily. Until you get them all paid off and at a limit, you are comfortable paying per month (as we will discuss paying your bills with the credit card), getting rid of the debt is a number one priority for you and your family. Once card three is paid off, put the money toward paying off your third credit card completely. Here is what should happen:
- Credit card 1: paid off in three months (200 – 75 – 75 – 50=0)
- Credit card 2: paid off in four months (300 – 75- 75 – 125 – 25=0)
- Credit card 3: paid off in four months (1,500 – 350 – 350 – 350 – 450 = 0)
By giving most of the payment to credit card #3, you can pay them all off sooner and quicker. And it was in less than six months, which is great. By getting rid of short-term debt, piece by piece, you are on your way to getting your family’s one income on financial success. It will also teach you which credit card payments you can take on and bite when things come up; you can pay for things that pop up in life.
Second, now you must be asking, well, how do I pay my bills? I don’t want to rely on my debit card or checkbook entirely. I don’t want to withdraw. Here is some good news: for your fixed expenses and some variable expenses, pick a credit card with no annual fees and that has rewards that you will use for the future. Say you would like to get cashback on individual purchases. No problem, this will not only help your one-income household but allow for more spending and saving. Unique cards do cashback. Now, if your family has a Prime membership like most, Amazon offers deals on buying through them, and when you first sign up to join, they will take off $150 your purchase. If you would like to get a special deal on entering prime, click here. By buying all of your items through Amazon, you will get cashback and be rewarded for shopping at this retailer. If you decide to pay all of your bills on one credit card, like, say, Amazon’s, you will be able to keep better track of your expenses by having it all on that card.
Special note: if you would like to save money on gas, many people get a credit card through their favorite gas station. However, it is essential to note that most credit cards will give you cash back on purchases at a gas station. See if your credit card already does this. That way, you can start to claim the rewards and build your credit as you go.
Third, now that you are aware of how much money you are spending on your expenses remember to claim that cashback. You can often use that cashback to go towards savings, or what some people do is pay that cash back with bills, so they have some money for protection. Credit card companies make it seem like credit cards are something to be feared and never to understand. Once you know how to maximize your cashback and rewards through the credit cards you use for your family’s needs, your one-income household won’t need to worry about living paycheck to paycheck. Understanding your accounts and your credit is how you can take your financial power back and maintain a one-income household.
It’s often called living the dream for a reason.
4. Coupons, coupons, and coupons
Many people believe that clipping coupons are a waste of time. However, it’s not. Coupons rarely get used because of the perception that only certain groups use them, so, therefore, only they get to use them. The vouchers are there to make things more comfortable as the costs keep rising, not harder. For a family on a single budget, learning how to coupon can not only save money in the long run but keep up with how much you were paying before you started using coupons.
Now, you are probably asking yourself: ‘Well, where does my family start? Do I have to sign up for them? Pay a fee to get them?’ The answer: typically, where you shop, places will send you coupons to get you to come in and spend the money. So, the vouchers will find your abode. But if you are worried that they won’t go or think you won’t have the time, you can always check out the variety of websites out there.
For example, Rakuten is an excellent place to start if you would like to get cashback and receive savings while you shop online. If you would like ten dollars off your next purchase, click this link. From there, you will be able to get cash back for shopping at your favorite stores, plus get deals on items at a much more reasonable price for your budget. Recently, there has been a rise of sites popping up in competition with one another. Sites like Rakuten and SwagBucks are on the rise, thanks to the current holiday season. Ibotta gives cashback for every grocery shopping you do. If you aren’t sure which to go for, be sure to check out these articles to help you decide:
Couponing is also available for food, especially meal prepping. People tend to save most of their money by learning how to cook rather than going out for every meal. Not sure where to start on this? Don’t worry. This site, $5 Meal Prep, can help you with all of your meal prep needs. It has everything that you could need, from coupons, deals, discounts, and so much more. Not only will this $5 Meal Plan help you with your journey to managing a one-income household, but it will also help with a long-term goal of becoming more dependent on yourself as a result. Still not sure? By clicking on this link, you can do a trial run for a week, see if it's for you and decide from there. Most of us pay more for expenses when it comes to food because it appears to be a daunting task to take on. But by taking the time to learn, you can start to achieve financial independence.
Thanks to couponing, there are many different ways that you can save money and even earn money as you shop. It is a whole other world when you have the knowledge you have to succeed successfully and wildly. Never forget that while your household is one, your experience is the power to get the prices you need to thrive in your survival.
Money is a human-made invention. There is no way around it (for the most part). It’s hard to admit the words ‘I don’t know when it’s a worldview of criticism. But how do you expect your situation to change if you keep trying to ‘keep things the way they were? Science deliberately looks for new ways for things to change that once hailed it. After all, there is a reason science doesn’t mind being proven wrong.
What about you? Can you be proven wrong despite your beliefs about money and such?
Add your comments below.
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