How to live with less
Having a reduced income doesn’t have to call for panic, says financial adviser and author HELEN BAKER
Sometimes living with less income is a choice, such as when a baby arrives. Other times it’s by default, such as redundancy, separation or a partner passing away. Whatever the reason, life on one income is a big adjustment, but this checklist will go a long way in simplifying that transition.
BEFRIEND YOUR BUDGET
Relying on one income when you’ve been accustomed to two requires some cutbacks. If you have a household budget, revisit it and adapt it to your changed circumstances.
If you haven’t got one, now is the time to start. Be diligent in separating your needs from your wants. Cut things you no longer need – unused subscriptions are a great start. Set some money aside in an emergency fund for a rainy day.
SAY NO
Many parents try to maintain the standard of living their kids previously enjoyed, but doing so on one income is impossible. It means being brave and saying no sometimes. Compromise on where your cash goes. Swap nights out at a restaurant for a nice meal at home. Trade beachside holidays for days out at a local beach. Buy brand names your kids love secondhand or from outlets.
DELEGATE CHORES
Make your kids earn their pocket money by taking over more of the household chores: washing dishes, doing laundry and feeding pets. It’s a great way of teaching your children responsibility and the value of money. But, crucially, it reduces the burden on you, giving you more time to focus on income-generating and money-saving activities.
PLAN YOUR FUTURE
Invest some time in looking at your future: where will you live? Where will your income come from? What happens to your kids, home and assets should something happen to you? Consider income protection insurance – it could be a lifesaver should you ever be unable to work because of illness or injury.
FIND SUPPORT
Help is always at hand. Reach out to family and friends for emotional support – they are a shoulder to lean on as you acclimatise. You can band together to carpool, share
after-school care duties and swap clothes and other items. Seek financial support from licensed accountants and advisers, rather than well-meaning friends. Professional advice can help you minimise tax, claim family tax benefits, build savings and optimise your cash flow.
LOOK AFTER YOURSELF
Your health – physical and mental – is paramount. Eat well. Exercise regularly. Find outlets to alleviate stress. Check in with your doctor. Poor health will blow out your medical bills and compromise your ability to earn money. Remember: airlines tell passengers to fit your own oxygen mask first before helping others: the same goes in life.
For more information about Helen Baker or to buy her books, visit onyourowntwofeet.com.au