When a couple becomes new parents, there are many changes they have to make. One of them could be the decision to live on a single income. Yes, it is tough and may cause some upheavals in the relationship between husband and wife.
However, a bit of sacrifice, early planning and lifestyle adjustments can help couples overcome the financial strain of living on a single income. Here are some ways how families can survive with just one salary.
Practice Living on a Single Salary
If parents-to-be will be living on a single income when the baby arrives, it’s best to start practicing way ahead, say David and Libby Koch, co-authors of Kochie’s Guide – Creating and Building Real Wealth with Lots of Love and Laughs [Wilkinson Publishing, 2009].
The authors urge would-be parents to start planning for their family’s financial future as soon as possible, perhaps a year before planning to conceive. “Many couples may already do this – using the second wage as a saving or an investment builder. This is the absolute best time to make the most of you financial couple power,” they write.
Couples who practice to survive with just one salary will eventually reap two benefits – the ability to handle parenting on a single income and savings that can be used for emergencies or build future wealth.
Make Use of Government Assistance
Many parents, particularly those living with low incomes or a single salary are eligible for government assistance. These benefits and assistance come in various forms, for parents and children. In Australia, the authority in charge of government assistance is Centrelink. It is responsible for giving out childcare benefits, family tax benefits, parenting payments, carer allowances, maternity bonuses and newborn allowances. Every family should check what it is entitled to. Make good use of all government assistance available.
Start Saving Early for Kids’ Education
The cost of education is one of the biggest costs in raising children. Although this may seem far away for new parents, it’s sensible to start saving early for kids’ education, particularly if there are plans to enroll them in private schools or financing their tertiary education fees, say Melissa Doyle and Jo Scard, co-authors of The Working Mother’s Survival Guide [Allen & Unwin, 2007].
To save for children’s education, Doyle and Scard suggest that parents start an automatic debit on pay day to transfer some money from the salary into an investment account, open an education trust for kids, invest in managed funds or shares and check out education and scholarship programs.
Avoid Overspending on Children
All parents want the best for their children but they don’t have to spend a fortune to keep their children happy, comfortable and healthy. Barbara Drury, author of Personal Finance for Dummies [Wiley Publishing Australia, 2002], advises parents not to spend thousands decorating the nursery, buying state-of-the-art baby goods or providing expensive holidays and entertainment.
“Go to garage sales, accept hand-me-downs, join toy and book libraries and browse in second-hand shops,” she writes. Drury also adds that while trips to museums, theaters, theme parks and concerts are important, so is fun with friends in the backyard. Parents should also try free or cheap activities like a going to the beach, having a picnic at the park, hiking and camping.
Families living on a single income face lots of financial obstacles. However, it is something that is achievable. Ideally, practice surviving on just one salary way before the baby arrives. Also, make good use of government assistance, start saving early for kids’ education and avoid overspending on children.
Found this article useful? Read also Pre-baby Budgeting Ideas, Money Management for Parents and Smart Household Money Management.
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