How can you survive on one income?
Whether you’re a single parent family, one partner works and the other stays at home, one of you lost their job or one of you is sick, there are numerous reasons families have to rely on one income. Depending on the size of the single income, it can be tricky. Here are some tips to help.
This post may contain affiliate links for products or services we personally use and recommend. Check our disclosure here.
1.) Know your income
One of the most important parts of surviving on one income is knowing exactly how much that income is. For some families with casual and shift work or their own business, this can be harder as it varies greatly. If your income is variable, try to base it on the lowest average amount or expected amount. Anything above that is a bonus then.
List all sources of regular income such as wages, Centrelink payments including family tax benefit A and B, Carers Payment or pensions then list other income you get and have an idea of how much you make such as catalogue delivery, cleaning, babysitting, online surveys etc.
2.) Know your expenses
It sounds simple, but many people are surprised when they look back over their bank accounts where some of their money goes! Write all your expenses down from the obvious ones such as rent/mortgage, food, insurance, transport to the less obvious ones such as some work expenses, school expenses, takeaway food and unexpected bills (which if you look over your year, sometimes happen on a regular basis).
Check out this post for more on how to create your budget.
3.) Make lifestyle choices
When you listed your income and expenses, did they balance out? You want your expenses to be less than your income, not just match it. If you are living pay to pay, something needs to change. This is where some tough lifestyle choices usually need to be made.
Some people find switching to a cash system for a while so they physically see where their money is going and have receipts to account for everything helps a lot. That is one step.
On top of that, go over your expenses with a fine tooth comb and work out where you can reduce them so you can put more money into savings or off debt. For some ideas, check out my annual financial review and how I’ve saved nearly $5,000 with it, or these 31 ways to make and save $200 or more.
Other lifestyle choices
Is the one income a conscious choice or an unexpected event? Is it something you want to last long term? If it is, you need to create a plan for this to work. Your budget needs to be realistic and if you aren’t covering your expenses, you need to look at other options. This doesn’t mean you both need to work outside the home though. Here are 43 ways for single mums to make money and 51 ways to make money from home. Most of these options can be done by anyone.
I’d also recommend reading this post about the number 1 question to ask yourself to make and save more money. I apply it to every area of my life and save thousands.
4.) Plan your future
In order to live on one income long term, you need to plan for your future. Work out your superannuation and how you will both retire. Speak with a finance professional to discuss options such as co-contributions, the income earner contributing to the non-income earners’ superannuation and look at other options.
Personally, I’m a single mother so it all comes down to me. I have superannuation I contribute to, shares (I use Raiz – previously Acorns, to build it slowly then cash it out and buy large parcels of shares elsewhere. Check out this post for more information and a comparison between Raiz and high-interest savings accounts.) I also have this blog, a few other sites and invest in businesses. This means I have diversified my investments and have multiple options for when I retire. Also, you can still be a millionaire, even as a single mum!
What do you want your future to look like? How will you achieve that?
5.) Look for other ways to make money
As mentioned, you both don’t need to work or if you are single, you don’t need to rely solely on your income. In fact, I recommend having a few income streams to protect you against job loss and to help you get financially free sooner.
Each month I share ways I make money on the side. You can check out January 2018 here, March 2018 here and this post on the $20,000 challenge in 2017. With that challenge, in my first month, I made $2,710 and $8,741 in my third month. Most of what I do, especially when it comes to making money on the side, is done from home, around my kids or is pretty much passive. Have a look and decide what would work for your family. It might be doing some online surveys (find the best Australian ones here), mystery shopping, market research, renting a room on Airbnb or you might want to start your own business. You can do this for as little as $100!