Back in the fifties, a single source of income was all that was necessary to keep the family happy and prosperous. That changed to a two income family during the seventies where husband and wife brought home the bacon while the children assumed the role of latch-key kids. By the nineties one or both parents had to moonlight to make ends meet.
The economic climate today has taken a severe tumble for the worse. Many people have lost jobs and savings and are struggling to meet their financial obligations and still maintain a reasonable standard of living. Survival on a single income is not something anyone anticipated a return to, but many are forced to rethink priorities and cut back on the lavish lifestyle that credit purchases have brought in.
Going the single income route for either the husband or wife is not an easy transition. Hopefully, government incentive programs will create a turnaround in the economy before the current situation becomes worse.
But no one can count on the hope of a return to prosperity. So we must all be prepared to adjust our lifestyle to cope with the current reality.
The first question you need to ask is whether you can make a go on a single income. Likely you will need to use some of your savings as a buffer while you adjust to one income. But since the average American simply hasn’t saved much and is only two months away from bankruptcy, a single source means a severe cutback on lifestyle unless that second source of income is found quickly.
Single income living demands you take a close look at your expenses. For most families, quite a lot of it is going toward unnecessary luxuries, nor do they have any budget or plan on using the money they have. The best way is to keep a ledger and write down every dollar spent. It is one good way to find the areas where those few dollars spent on coffee, cigarettes and candy add up to a substantial drain on income. It’s those insignificant expenses that make a big difference.
Next you need to analyze all your bills. Credit card debt is a major problem. The average family has some 17 credit cards and that means a lot of debt. If it becomes difficult to pay off the minimum balance you should contact the credit provider to make suitable payment arrangements. The best strategy is to cut up your cards and keep only two to use for emergencies only.
There’s little enough that can be done with taxes, insurance, heating bills and bank loans, but a careful analysis can get you cheaper rates on insurance. Your banker may be able to help reduce the interest rate you currently pay on your loans. A one income family saves more on childcare costs, fuel and parking fees. Two cars are a luxury when only one spouse is working. Keeping the existing car an extra two or three years offsets the cost of buying new every three years. Consider car pooling or take the bus to work if you live in the city.
Grocery shopping is a necessity, but there are several methods where you can shave off as much as 30% of your current expenses on food. Using coupons, buying in bulk and creating your own meals instead of buying prepackaged, throw-in-the-microwave can save a good deal of money.
Entertainment is another area where you can save some needed dollars. It’s not necessary to eat out or go to the movies several times a month. Consider the tips, alcohol, popcorn and chips and that evening out costs upwards of a hundred dollars plus. Rent video instead of going to the movies.
While we all need clothing, it’s not necessary to keep up with the latest fashion trends. That closet of unused clothing can be varied to create unique styles. There’s no shame in hand-me-downs or buying at thrift shops. You don’t need to have your clothes dry-cleaned every other day. Use that washer instead of a laundry service. Dry your clothing outdoors instead of the dryer to save on your electrical bills. Being frugal with buying clothes can translate into a 50% saving on buying new.
Furniture is one of the biggest expenses next to appliances, cars and homes. But you don’t need to buy new. Be attentive for discount and close-out sales where you can pick up good furniture for less that you would at a well-known furniture retailer.
Lastly comes those little expenses. That pack of cigarettes costs you more than just your health. Eliminating that extra cup of coffee and donuts or eating at the company cafeteria can save you as much as $1250 per year based on an average expense of $5 a day. That doesn’t include those workplace gifts, cards, cakes etc. that you’re often asked to contribute to.
Many families discover that single income living isn’t as bad as they thought. That second job just created more expenses than was necessary. So before you take the step to a one-income family, plan ahead. Create a strategy that suits you best and stick with it. It’s good discipline and will help you prosper even more once the economy starts a turnaround.