Coping financially is not only about how much you earn. It is also about using effective money management strategies and planning your finances carefully.
Donât be afraid if you need to work less. Make a thorough financial review first if you can, and create your own money management plan.
In today’s society, most families are dual-income households. However, there are times when the family may choose to give up one of their paychecks. Maybe the wife wants to be a stay-at-home mom for a while, or one spouse wants to return to school. Whatever the reason, creative thinking and determination can help ease the transition to one paycheck.
If the reason for the change is a planned one, both partners need to have an open conversation about the future. Both must be in total agreement with the change and how they will approach their new financial lifestyle together.
Once this has been established, both need to take a look at current expenses and decide where and what to trim. What are the essentials, such as life insurance, retirement savings, and mortgage? What are the things that you could cut back on, such as transportation, entertainment, dining out, or high-priced food items?
Remember that certain expenses, such as savings and emergency funds, should not be diminished as these are your safety net for your future.
Savers live below their income level, so understand that as your income drops, your standard of living will also decrease a bit. Purchases of non-essentials, such as clothing or a grill, should be postponed until disposable income increases. At the same time, don’t make yourself totally miserable, since this is a lifestyle you chose for yourself. Allowing yourself a small budget for the occasional luxury is fine as long as it is within your means.
It may be a good idea to have a trial run before you actually drop the second income in order to come up with a workable money management plan. Channel one paycheck into a savings plan for a few months, and see if you can live with your new budget. This will help you get used to your new situation when it finally occurs, and it will also provide you with some more savings to cushion the transition.
You might also want to read my article: Four Great Tips for Better Money Management for more information on how to manage your money.
Many families report that they have been pleasantly surprised to find that they can still get by on one income. It is just a question of making a choice, setting priorities and sticking to the plan
Disclaimer: This article is for educational purposes and is not a substitute for investment advice that takes into account each individual’s special position and needs. Past performance is no guarantee of future returns.