As the cost of living intensifies, running a family on a single income is challenging. According to the latest facts, “almost half the children being raised in single-parent homes live in poverty.” With these 3 million families struggling in the UK and 1.5 children impacted, how can they cope?
The blog states some strategies to overcome life challenges while nurturing a family on a single income. It will help you review and take control of your finances. Eventually, given one income and economic fluctuations, you can create a comfortable lifestyle for yourself and your family.
10 strategies to survive as a family on a single income
You may want to start a single-family income due to multiple reasons. It could be your wife’s pregnancy, your child’s health, unemployment, etc. In these situations, you may be compelled to nurture a family on a single income.
You may improve finances by exploring part-time incomes or work-from-home jobs. Moreover, check the possibilities to qualify for government benefits for families living on a single income. It may prove relieving given the liabilities to cater. Here are other aspects to consider to survive on a single income as a family:
1) Downsize your lifestyle
Living on a single income requires you to live below the means. For example, saving is a must if you are a family of 6. Identify the aspects that can help you cut extra bucks on everyday needs. You can achieve this by cancelling any subscriptions that you hardly use. Additionally, switch to affordable and cheaper rental and utility services.
It will help you save some money for your household. However, most individuals struggle to downsize a lifestyle due to habits. If you habitually use a particular thing that costs more, ditch it. Think from the future and current perspective. It will help you curtail expenses and maximise savings.
2) Set up an emergency fund
An emergency fund is a savings fund that helps you save for critical financial phases like- income drop, unemployment, major accident, business loss or permanent disability. It is ideal for a one-income family as it boosts income. It acts as a financial backup if any significant expense confronts you. It is for low-earning individuals as you don’t have to save a lot monthly. Instead, you can save as little as you can from your savings.
However, you cannot withdraw frequently from an emergency fund. If you encounter any emergency, seek alternative finance sources. For example, individuals below the means have low incomes and high debts. It impacts the credit standing and restricts instant cash opportunities. However, you may get a loan for bad credit in the UK with no guarantor requirement.
It may help you with needs like financing utility bills, groceries, and home repairs without a third-person guarantee. It only requires you to have proof of legal income. Meeting your critical needs with such loans is more affordable than tapping emergency funds or credit cards. Additionally, the easy repayments make it a go-to partner for emergencies.
3) Adjust your budget a little
Changing financial situations requires one to re-analyse the budget. It will help you review the current expenses and optimise according to single-person income. Analyse how much you can save by cutting commuting expenses, lunch, shopping for formal apparel, etc. Yes, first consider expenses you no longer need to bear. Next, consider your short and long-term life goals. For example, if you must replace your car’s seat covers, you must save.
Similarly, you can save for long-term goals like a retirement fund. Additionally, if self-employed, you must work on tax liabilities. Filing your tax assessment timely makes you eligible for tax rebates. These rebates may help improve your lifestyle. It boosts your savings.
4) Clear debt payments
Identify and calculate the total debt you owe. One cannot grow financially with multiple debts. Research and find a way to pay debts somehow. Otherwise, the rising interest and penalty costs may become unbearable for you. Begin with the most expensive debts first. However, avoid paying student debt or mortgage early, as it may affect your credit score.
Alternatively, settle credit cards, overdrafts, and payday loan debts quickly. Additionally, pay the penalty on tax filing if you filed it late. Settling debts improves your financial standing and credit score. It makes things affordable for you.
5) Check insurance cover maturity dates
Every financially knowledgeable person invests in health and life insurance coverage. You may have some ongoing insurance policies approaching maturity. Check the policy maturity dates and prepare accordingly. You may get the amount in your respective account number. If you are behind on some payments before maturity, arrange it.
Check whether you can negotiate on the covers or compromise with the low amount after maturity. The insurance provider may contact you to confirm the maturity with some documents. They may ask you to either renew the cover or claim cash. You can choose according to your financial situation. Claiming the amount will help you meet or tackle the crisis.
6) Consider income tax withholding
Check whether you can re-adjust it on a low annual income. It allows you to increase allowances and contribute less towards tax from your paycheck monthly. Your employer may do this favour if you struggle with basic needs on minimal income.
However, analyse the pros and cons of re-adjusting tax withholding figures. You can consult a tax professional or IRS directly. If he suggests you re-adjusting income tax withholding, change your budget.
7) Educate your family on financial management
Do not forget your family duties while securing their future. Invest enough time with your kids and other family members. Identify their needs and plan the best ways to achieve them. You can empower this goal by educating your family on the importance of financial management.
Educate them on the best ways to save on general household expenses, taxation and child education/upbringing. It will help you strengthen your goal of achieving financial independence and boost savings. Additionally, the collective effort will help you achieve individual goals quickly.
8) Appoint a family member for family finances
If you are too busy making a future for your family, appoint someone to manage financial matters. You can choose someone with basic knowledge to improve financials. His responsibilities may include:
· Review the bank accounts
· Regulate direct debit facility
· Check and have linked accounts for easy transfers
· Check the insurance policy maturity dates
· Identify the best government grants and child benefit schemes
· Exploring the ways to maximise passive income returns
· Identifying potential job opportunities according to individual skills
9) Explore part-time jobs and learn DIY skills
Unless your single income suffices the expenses, explore part-time gigs. Encourage other family members to take up part-time gigs and support household expenses. It reduces the burden on an earning family member and strengthens the financials. Additionally, explore alternative ways to save on daily repairs by learning DIY skills.
You don’t know, but you can save £3000/month by repairing and cleaning certain things yourself. However, do not engage in dangerous tasks. Some critical and sensitive aspects require expertise. You can analyse the tasks and the best ways to do them individually.
10) Remain flexible towards a few changes
You may encounter some things that might not go as planned. Thus, practising flexibility while living on an income may help. For instance, losing your job requires cutting down expenses. Here, you may encounter several health issues. Having an emergency fund ready helps finance without difficulties.
Thus, prepare and be willing to make quick financial adjustments when necessary. Living off one income makes this even more critical.
Bottom line
These are some potential ways to raise your family on a single income. Identify and educate yourself on government benefits and grants. It reduces liabilities and helps clear debt. Additionally, reduce household expenses by downsizing things. Check alternative modes to earn or part-time gigs. It will help support the constant short and long-term life goals. Keep enough financial flexibility for emergencies. It will help you avoid panic and decide right.
