Talk to a debt counselor toll free:800-300-9550
Our Clients Rate Us Excellent
Based on 3234 reviewsTrustPilot Reviews
All of us aim for financial growth in our household. Regardless of where you start, we want our financial position to experience an improvement each year. It is not really about being materialistic. The inflation rate, the high cost of health care, the increasing tuition fees of universities and colleges, and the expensive housing market - all of these require us to improve our financial standing. Of course, that is easier said than done. You cannot control the appraisals in your workplace and even business owners would have to work double time in order to increase their income and profit potential. What you can control, however, is your ability to manage your household income. The truth is, you can still have financial growth even if there is no increase in income. It all boils down to how you will manage the finances in your home. You can earn the minimum wage and still have enough left to improve your economic level. You just have to learn how to make the right choices that will get you closer to your financial goals. One of the choices that you can make, as a couple, is to live on one income. Based on the data from PewResearch.org, 66% of households are dual-earners. At least, this is true for married couples. More than 5 decades ago, that number was not even half. It was the norm in our society for the men to be the sole breadwinner in the family. Now, couples find the need to keep both of their work because that is the only way that they can meet their needs and achieve financial growth. While that logic is sound, it is not the only way for you to improve your finances. Believe it or not, boosting your financial position can be better achieved if you try to live on one income. Does that mean one of you should stop working? Of course not! As long as there are no kids yet, the both of you should continue to work.
4 financial improvements after living on one-incomeWouldn’t it be hard to live off one income if you are used to living in a dual-earning household? That would mean drastically changing your expenses. You practically have to reduce it by half! Admittedly, that would be hard but this is one of the ways that you can improve your finances. Besides, it is not really impossible to do this. When you start having kids, one of you will make the sacrifice to stay at home with the children and take care of them. Why not start now? There are households that are able to live on a one-income budget. If they can make the transition, you can certainly do the same. If you need the motivation to fight the urge to spend on a two-income household, here are 4 reasons why this move can capitalize your financial growth. You can increase your savings. Unlike one-income households, you still have the benefit of having 2 salaries each month. You are merely choosing to spend only one. The other salary can be used to increase your savings. This is a direct way of fueling your financial growth. This can increase your savings exponentially. According to the data from CreditDonkey.com, 26% of their respondents admitted that they do not have any savings. 36% also admitted that they have not yet started saving for retirement. Even if you have fallen behind on your saving goals, you can quickly catch up if you live on one income. There are so many saving goals to meet. You have your retirement and emergency fund. Once you start having kids, you can start saving for their college fund. You can also use the second income to save up for the down payment on a house. That way, if one of you really have to stop working because the kids start arriving, you already live in your own house and you do not have to worry about paying rent. You can aggressively pay off debt. Another reason to live on one income is to aggressively pay off your debts. If saving is the direct way, this is the indirect way of working on your financial growth. Some experts say that if you are to choose between saving or paying off debt, you may want to prioritize the debt. The interest of your debts is greater than those of a traditional savings account. You can save more if you get rid of the high-interest debts. This is a great debt repayment strategythat can minimize the amount that you will waste on paying interest. You can use it to set up a passive income source. The third reason why you want to live in a one-income household is to get the capital that you can use to set up a passive income. There are many options. If you have a spare bedroom, garage, or basement that you do not use, you can renovate it and have it rented out. The monthly income can also add to your financial growth. You can also use the second income to buy stocks, bonds, mutual funds, and other securities to profit from it. Take note that this is separate from your retirement funds. These will be investments that you can earn from each month. You can use it to remove financial stress and increase financial security. Having all that extra money being used for your financial growth will increase the security that you feel about your finances. As that increases, you will feel less stress about any financial issue that you will encounter along the way. This will give you the peace of mind to concentrate on other things. These could include other activities that will help you improve the quality of your life - which is far better than any financial growth that you will gain. Hopefully, the 4 reasons provided can motivate you to make the sacrifices that will help you live on one income successfully.
Steps to make living on one income easierWe have mentioned how this can be quite difficult to do. According to the data provided by the Bank of America, the average monthly budget across different generations range between $2,531 to $5,044. The Late Boomers, those between the age of 45 to 54 years old are perceived to have the highest monthly budget - possibly because they are in the midst of sending their children to school, saving for retirement, and paying off mortgages and other debts. With this in mind, if one of you is earning $4,000 a month, you know that you can make this one-income household work. While it is possible, it does not remove the fact that it will be hard to make the transition. Here are tips that you can use to make things easier.
- Downsize. Start with your house. Go to a smaller home so you do not have to pay a lot for your household expenses. If it is just the two of you, why not rent a studio apartment? You can think about moving to a bigger apartment if you get pregnant. If you choose the right home, you may be able to lower your expenses significantly without making too much lifestyle sacrifices.
- Do it gradually. Cutting back immediately is hard. Do the transition gradually. In the first two months, live on one income and ¾ of the other. The third month, you can cut back even further and live on one income and half of the other. You can keep on doing this until you are living on one income alone.
- Set saving targets. This is one way to keep your mind off what you are cutting back on. Instead of concentrating on what you are removing, focus on the money that you are putting aside. This will give you more motivation to continue living on one income.