Families with a single income have a hard time coping with ever-rising living costs. While some families deliberately choose the one-income setup, others are faced with situations such as job loss or prolonged illness that causes them to rely on a single person’s earnings. Whatever the reason, one-income families can have it hard, particularly when there’s a large debt to be paid off.
If you’re part of a single-earner home, you can resolve some of your family’s financial woes through prudent money management. Take a look at the following tips to gain back your household’s financial health.
Make a budget—even if you don’t want to
Some people don’t like to make budgets and others don’t think they need to because they’re not really left with a lot of money after meeting the major expenses. However, financial experts say that you should create a budget regardless of your income and irrespective of whether you enjoy the activity. Working a budget will help you visualize your total income and expenses and give you greater control over your spending.
Stick with your budget no matter what
Once you realize that budgeting can actually help you lead a less stressful life, you’ll get addicted to using it. But for that to happen, you’ll need to use it diligently for the first few weeks and update every planned payment and unplanned expenses. Refer to your budget document to decide if you can go to that fancy restaurant this weekend or should rather cook a hearty meal at home.
If you use it diligently, your budget is a wonderful tool that will empower you to make smarter buying decisions, live within your means and foresee a possible crunch.
Reduce your credit card usage
If your credit card has a large balance and you’ve been unable to make monthly payments, you’re already set up to pay huge interest and late fees alongside the principal amount.
The best way to avoid such a situation is to minimize your credit card spending not when you foresee a financial crisis approaching, but when your finances are in good shape. Limiting your credit card spending is a crucial step in smart money management. Moreover, it will leave you with more money to pay off old balances.
Set a family limit for unbudgeted expenses
Every family ends up making unplanned expenses in the form of entertainment, medical emergencies, attending to guests and so on. When you’re detailing your monthly budget, set aside some money for recreation and some to meet other unforeseen costs.
Now the key to making your budget work is to get everyone on board regarding unbudgeted expenditure—use any leftover money for fun once all the bills are paid but don’t go overboard simply because you have a couple of hundred dollars additional to splurge. Save the extra money for a rainy day or for the holiday season.
Consider debt consolidation
Brian Talbot from Evolve Loans says that the worst thing to do when faced with overwhelming debt is to ignore it. Getting help from professionals is a great first step in doing something to resolve and repay your debt. If you have mounting debt and have been falling behind on payments, a debt consolidation loan can help ease your burden by bringing all of your payments together into a single monthly payment.
To safeguard your interests, choose a trusted, experienced and well-regarded debt consolidation company that won’t rip you off in the name of helping you out.
Don’t take on new monthly expenses
When you’re a single earning member of your family and you already have debt that you want to clear as soon as possible, do yourself a favor by resisting the urge to buy that new appliance at the seasonal sale or take out a new loan because you think you can manage the EMIs.
Be realistic about your finances and don’t take on additional monthly payments just because you can. Ideally, if you have any surplus income or savings, put them to good use by paying off your debt.
Master the art of smart shopping
You can save hundreds of dollars every quarter by making smart shopping decisions, such as buying at seasonal sales, waiting for online discounts and looking out for limited-period offers. With online shops, you can always find a less expensive version of the items you want to buy. Similarly, cut back on food bills by cooking more frequently at home, and work with your family to cut your utility and grocery bills.
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