26 Aug 2013

Surviving on One Income

A friend from high school recently emailed me via FB as she had been on hiatus from that social media platform for several months. We did the usual banter of "How are you?" and "What's have you been up to?" and she was surprised to find out I'm not working. Of course she would be, we hadn't touched base in over 8 months but for those who know me or have read past entries would clearly know currently I am not working.

She asked me how we were surviving on one income and without really going into the finer details I responded with "Just fine, of course you adjust your spending habits but we have a roof over our heads and food on the table every night."

So it got me thinking, cause I know some people are wondering how does a growing family with mortgages survive on one income. Here have been the major changes we've made in our home to be allow me to stay at home ...

  • I am in no way am I putting down any families who live on one income. If anything they are proof it is achievable and probably have figured out even better ways to survive on one income.
  • I have not provided information on government tax benefits as we don't qualify for any, but I encourage those on one income to try utilise that means of help as it would assist the family budget.

  1. Stop spending as if there are two incomes. One of the obvious changes to make when the household income drops to one is to minimise all unnecessary spending. So limiting the frequency of "entertainment" related activities such as eating or going out. 
  2. Review and amend household budget. After I was made redundant we reviewed our household budget to determine whether a)we could survive on one income and b)where we need to cut or move costs. We dropped our monthly budget on costs such as entertainment and allowance ... yep mum and dad gets an allowance every month. And unfortunately also on money generating items such as our savings and the children's savings fund as well. Even though you are on one income DON'T STOP SAVING!!
  3. Stick to a budget. There's no point in setting a budget if you're not going to keep to it. If you're weekly grocery budget is $100 per week aim to stick to that amount or less. Whether its buying items from a different store because you know its cheaper there or maybe not buying a particular expensive item every week, its important to keep within your budget. 
  4. Shop around for better deals. I've mentioned this previously, as your policies for car insurance, home insurance, electricity, gas etc come up for renewal you should check out the competition and see whether you can get a better rate. Since I've stopped working we have moved our health insurance providers to hubby's work preferred provider, car insurers from Alliance to AAMI, ceased my income protection policy (since I'm not earning an income) as these changes are allowing us to have a little bit more in our pockets at the end of the day. You need to review every expenditure and see whether you can get a better deal or decide whether you even need it.
  5. Avoid spending time at places where money can be spent. Avoiding temptation is the key to not spending money on unnecessary items. Stop hanging out at the shops where you there are ample things to buy, even grabbing a cup of coffee is over priced these days. Being on one income (and having an active toddler) has actually opened our eyes to doing more activities outside. Whether it's spending some time at a local playground, walks around the park or catching up with family and friends. When you actually look you would be surprised there are a lot of free family friendly things to do. 
  6. Going public with baby number two. The public hospital option is 100% free. All the medical costs associated with my up coming pregnancy is being paid by the government. Our incomes are hit with the 1.5% medicare levy so there's no shame in claiming what every tax paying Australian is entitled to - free medical care. It wasn't a first choice but again not having the right health cover when we found out I was pregnant and also my previous obstetrician not being available on my due date, it was an easy decision. My out of pocket cost for my last pregnancy was about $5,000 if you take into account doctors and examination fees. We're saving that this time around by going public. 
  7. The number one tip is talking about your financial goals and the current situation with your partner. Although we never saw my redundancy or pregnancy coming, staying at home was something Ian and I discussed before making that decision. Don't get me wrong talking about money isn't ... comfortable. There will be a few harsh words and finger pointing but discussing your financial situation regularly is important. Having regular conversations allows you to have a clear understanding of where you're heading financially, identify where money is being wasted, come up with solutions to money problems and agree to financial decisions together. You'd be surprised how much better you feel when you have a civil conversation with your partner about your money problems - it's reassuring, try it.  
So those are the changes we've made in our home that has worked for us (so far) and has allowed me to stay at home. 

What advice or changes have you made to survive on one income?
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