Personal household circumstances can change for a range of reasons. The changes may be due to injury, illness or other unfortunate changes that result in the need for one member of the household to cease employment. It may also be due to the arrival of a new family member, resulting in the need to transition to a single income.
If accustomed to a dual-income household, the single income transition can be scary. Suddenly there is potentially half the income coming in to cover the same, if not more, household expenses.
Before you transition to a single income, it is important to take the time to compile a thorough budget. Ensure your budget covers all regular expenses, bills and groceries, with room for miscellaneous expenses as well. Compare this to your projected income to determine if you are able to cover your costs.
Even if your budget does cover your basic living expenses, it is essential to make room for the unexpected. Find a way to allow yourselves to build on your savings if possible, even if only making small contributions towards savings each month.
Cutting unnecessary expenses is essential before you transition to a single income household. Look at your current outgoing expenses and consider where you can cut your costs. Some areas include non-essential entertainment, such as subscription services.
It can also save a lot of money each year by shopping around with household services such as electricity, insurance and internet. This can sometimes cut hundreds of dollars from your yearly bills. An easy option is to use online quote services to find a better deal.
Don’t hesitate to make contact with your current providers either. You may find your bank offers you a reduced interest rate for your home loan or your insurance provider may consider reducing your premium if they are concerned you are considering changing products. This is a great bonus for you.
Being careful with your finances with only one income is the most important thing you can do to make the transition to a single income easier. Consider before you spend and be smart with your money decisions and you will find you can enjoy your lifestyle even without the extra income coming in.