TomorrowMakers

Is there only one earner in the family? Here are tips to use that income efficiently

How to stay solvent in a single-income household

It is often difficult for families to make ends meet, especially if there’s only one source of income and many mouths to feed. A family could be subsisting on a single source of income for many reasons. Some people lose their job or find themselves incapacitated on account of an accident or illness. Others might quit a steady job to pursue their passion, or choose to give up a career to take care of the children. 

Whatever the reason, the financial burden of relying on a single person’s income can have an impact on the lifestyle and interpersonal equation among the members of the family. But here are six practices that will help you stay afloat.

1. Create a budget

The first step is to take stock of all expenses and categorise them based on priority. This will help you understand how and where your money is going, and the adjustments you will need to make in future. 

Put your budget down on paper and fine-tune it over a period of time by reallocating funds to expense heads as you go along. Various digital tools now make it a lot easier to stay on top of your budgeting needs.

2. Clear all debts 

Debt can create a huge strain on your financial and mental well-being. Whether it is from a loan or unpaid credit card dues, it is essential to pay off the debt as the interest component can eat through your savings. 

Deal with high-interest obligations first and if possible try and consolidate debt to one or two sources. Try not to miss any payment deadline as this will have a negative impact on your credit score and make loans in the future a lot more expensive and difficult to secure.

3. Cut down on expenses

This sounds like a no-brainer, but do not cut off all leisure expenses. You still need to find opportunities to unwind and make memories with your family that you can cherish. Find alternative methods of making the best of what is available. 

Take advantage of free events and workshops. Ditch your gym membership and find ways to work out at home or outdoors. Avoid taking a cab when you can walk or bus it. Buy your essentials from discount stores or maximise on cashback offers.

4. Make some extra income

If you find it difficult to make ends meet even after cutting avoidable expenses, consider ways to bring in some extra cash. See if you can turn a hobby into a financially viable model; this way you will enjoy the activity while making some money on the side. 

Alternatively, you could look at freelancing gigs that are available online, which offer the freedom to work as and when you want. The reach of social media has enabled people to start a small business with just a smartphone. 

5. Appraise your tax situation

While most of your energy should go in plugging financial leaks, it is important to optimise your tax liability. There are legal provisions that can help save your hard-earned money while simultaneously providing benefits. 

Remember to make adequate insurance investments for family members so that an illness or accident doesn’t wreak havoc on your finances. Start planning for a retirement corpus early because it can fund multiple people in the future. 

Many such investments come as a tax deduction and help you save on the tax liability while safeguarding your future interests.

6. Evaluate long-term goals

Don’t make drastic changes from day one, which may be difficult to sustain. Start off slow and make gradual changes that are easy to adapt to. While the sole breadwinner takes care of all expenses, rely on other sources to fund insurance and investment plans, pay off debt, or build a contingency fund.

For the long-term success of your financial arrangement, start with small achievable goals and scale up as you go along. Avoid getting stressed every time there are bills to pay. If everyone in the house has their work cut out for them, it’s easier to overcome problems one at a time.

As the popular saying goes, tough times don’t last but tough people do!