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Jessica and Abby have been married for four years and were recently blessed with a baby. Since their dating days, the couple had decided that Jessica would be a stay-at-home mum once they planned a family. However, making the transition to a single-income household when Jessica was bringing home almost half of their total income was difficult.

tips-for-families-having-single-income

“It was a tough decision, but it helped that we had planned ahead. When we bought our home three years back, we were aware that one day I would quit my job and ensured we bought less house than we could afford then to keep our home loan repayments low. All these years, we effectively tracked our expenses, stuck to a budget, built an emergency fund and ensured we kept our debts small. Thus, I could resign from my job peacefully to take care of our little one,” says Jessica. “I agree that it is a bit of a sacrifice and takes time adjusting to, but with adequate planning and financial discipline, it is possible to live comfortably on a single income,” she adds.

Today, it is common for most couples to rely on two incomes to manage their household. However, sudden layoffs, medical emergencies and many other circumstances can push couples towards choosing a single-income lifestyle. Jessica and Abby’s case is just one example. While the couple voluntarily chose to be a single income family, some families may be forced to make that choice.

If you are living on a single-family income or plan to switch to a single income in the future, the following tips will help you save more and manage your finances better:

1. Track your spending – Tracking your income and expenditure is important to identify areas where you are spending too much. It may seem like a boring task to keep track of each and every cent that you spend, however, this practice will make you much more responsible and will ensure that you think twice before making any frivolous purchase. Simply download a free app such as TrackMySpend, an ASIC Money Smart App, and start tracking your expenditure.

2. Prepare a budget – Having a household budget is important for everyone but it becomes even more important for a single income family with limited funds. Once you start tracking your expenses, the next practical step is to create a budget by allocating fixed amounts to each kind of expense. Since you have already evaluated areas where you may cut down, you can now create a realistic budget based on things you need. Creating a budget is not as daunting as it may sound. There are several free budget templates available online that you may use to get started.

3. Transfer expenses into emergency account‘Someone’s sitting in the shade today because someone planted a tree a long time ago.’ According to Warren Buffet, one of the world’s wealthiest men, it is important to set aside money for the future before using your income to meet your regular expenses.

“We have given instructions to our bank to transfer 10% of Abby’s salary to our emergency account at the beginning of each month. This way, the money is gone even before we can think of using it and we have a steadily growing fund that will take care of any emergency expenditure in the future,” says Jessica.

While what Jessica and Abby are doing is great, remember to use the emergency fund only for real emergencies and not for any unnecessary expense.

4. Avoid using multiple credit cards – Multiple credit cards not only bring down your borrowing capacity (check how much you can borrow) but may also lead to high-interest debt by allowing you to spend beyond your means. Of course, it may not be possible to stop using credit cards entirely as often credit cards provide an easy line of credit and offer lucrative reward programs, but you need to be careful when using a credit card.

Despite a higher credit limit on your card, resist the temptation of spending beyond your budget and do not forget to make your bill payments on time, as any delay would bring down your credit score.

5. Keep your monthly payments minimal – Reduce your monthly bills as much as possible by cutting down on unnecessary subscriptions and expenses. For example, you could give up the expensive gym membership and workout at home to save some cash. In case you do not watch television, it is best to remove your cable connection and cut down on that bill. You could also regularly check with Internet providers for deals to save on your Internet connection.

With the low-interest rates on home loans available currently, refinancing your existing home loan to a low-interest rate home loan can help you reduce your monthly payments significantly. You can compare mortgage rates and other features for up to three home loan deals side-by-side.

6. Earn extra income – As a stay-at-home spouse, you can look for remote working options to make some bucks without stepping out of your home. If you have a particular skill, you could also leverage that to supplement your household income. For example, if you enjoy writing, there are several freelance writing opportunities available online that you could explore. You could also give art and craft classes to children and adults in your neighbourhood or sell your crafts online.

7. Use coupons – Using coupons for buying your regular groceries can help you save large amounts of money without any special effort on your part except collecting coupons and redeeming them at the right time! However, unlike America, there are no sale coupons to be found in your Sunday newspaper in Australia. What you really need to do to save some money is scour coupon apps such as Deal Direct, Groupon Australia and Screencoupon for great deals on everything ranging from your daily cup of coffee to meals and groceries.

In these times of rising costs, it is important for everyone to spend judiciously and save more for the future. However, saving money is not enough to secure your future. It is important to invest your savings wisely to grow wealthy. Investing in real estate is one of the most popular wealth creation strategies adopted by Australians. At HashChing, we are committed to making your property purchase even more beneficial by offering some of the lowest home loan rates in the market from over 60+ loan providers across Australia. Compare mortgage rates or ask a broker for assistance online – it is free.

 

By Vidhu B

 

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