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7 Money Secrets Of A Family Thriving On A Single Income HouseholdMany families are choosing to become a one-income household for hands-on parenting.by Aneth Ng-Lim .
With the rising cost of living expenses, it seems most families need to have Dad and Mom working full-time to make ends meet. But there’s a growing number of couples that have made the decision that one of them becomes the stay-at-home parent and the other to be the sole breadwinner. Interestingly, the breadwinner is not always the husband with many wives now choosing to build careers.
Jeff’s wife was making more money as a bank officer, so when they agreed to homeschool their children, Jeff quit his job and worked as a freelance design artist from home.
Jeff shares, “Pinag-isipan ko kung kaya kong maiwan sa bahay at maging all-around teacher, cook, yaya and driver para sa mga bata.” (I had to think hard if I can really stay at home and become our kids’ teacher, cook, caregiver, and driver.)
Six months in, Jeff is still coping with his new responsibilities but no regrets. “Mas bagay talaga sa amin na si Misis ang may regular na pasok kasi iyong trabaho ko naman walang oras at pwedeng gawin sa bahay.” (It’s a better fit for us to have my wife keep regular working hours as my job has flexible hours and can be done at home).ADVERTISEMENT - CONTINUE READING BELOW
Sally chose to quit her career as a junior executive despite the high pay when the worsening traffic kept her from preparing meals at home. “I know it sounds old fashioned, but I liked to cook for my family, and my husband also expects it of me. Napadalas na pinag-aawayan na namin na puro take out na lang at hindi rin healthy para sa mga bata.” (We started frequently arguing that we mostly eat fast food from take-out, and that’s not healthy for the kids too.)
Chie got tired of the long hours in her sales job and the constant traveling. Her husband suggested she quit and take a break. She balked at first, and then realized why not? “When I resigned, my boss made me an offer to stay, but I told him my husband already gave me the best offer — to quit, focus on my family, and he will provide for us.”ADVERTISEMENT - CONTINUE READING BELOW
It’s not easy to follow in the footsteps of Jeff, Sally, and Chie, and I know this as my husband, and I also faced this dilemma a few years ago. A family situation arose that required one of us to stay at home and literally become a hands-on parent. To the surprise of family and friends, I put my career on hold and left behind a job with an 8-figure annual salary.
How to thrive on one income as a family
While our decision shocked people around us, it was actually something we had discussed for months, and on my end, even planned years ahead. It’s been two years, and thanks to our open communication and financial planning, we are not only surviving but thriving on one income. Here are our financial strategies that made it possible.ADVERTISEMENT - CONTINUE READING BELOW
#1 Live on one income, even when you are still earning two.
We did a trial run for almost a year, where we paid for all our expenses only from my husband’s income. We set aside nearly all of my income for savings and tightened our belts in many ways. The first few months were really hard, almost to the point where we wondered if we can really do it.
The one thing that helped us the most was having a budget. By tracking our spending, we saw many items that we could let go, from cable TV subscriptions to mobile phone data plans. We finally saw the light at the end of the tunnel after the 8th month. By then, we had given up a couple of credit cards, switched to paying cash for small expenses and let go of full-time household help.
#2 Build passive income for the time when you are ready to quit.
While trying to stretch my husband’s income to cover our family’s needs, I looked at my savings and sat down with an independent financial planner. We discussed how to build a stream of passive income or income you make from money invested in real estate, business, or other activity where you did not actively work.ADVERTISEMENT - CONTINUE READING BELOW
As a result, we invested in government securities, corporate bonds, and insurance that pays out annual dividends to cover our children’s tuition. We plotted the coupon payments and dividends and made sure they will boost our family’s single income through the year when needed.
#3 Check your expenses and buy insurance for the family.
Before deciding to give up your double income, make sure to know how much your family spends on an annual basis. It’s not enough to know how much you spend in a month because some expenses hit you only once, twice, or four times a year.
Prepare an expense calendar to get a clear picture of how much you spend from January to December, and when the significant expenses typically come, say in June for school tuition. When you have that figure, do your best to buy enough life insurance that can protect your family in case the unexpected happens.ADVERTISEMENT - CONTINUE READING BELOW
#4 Be ready for the unexpected with an emergency fund.
We don’t want to think that bad things may happen, but if they do, it helps to have an emergency fund to fall back on. What if the parent who is working loses her or his job? How about medical expenses in case of accidents?
Financial experts recommend having an emergency fund that can cover at least nine months of your expenses. Assuming you did the math for item #3, you will know your saving goal for this one and can start putting away money towards it.
#5 Pay off as many debts as you can.
If you are living on a double income and paying off a home loan, a car loan, and several credit cards and personal loans, it may not be a good time to switch to a single income. If you can wait, pay down and pay off as many debts as you can before giving up potentially half of your family income.ADVERTISEMENT - CONTINUE READING BELOW
In our case, we waited to pay off a housing loan and sold a car. We took the leap of faith only when we were mortgage-free.
#6 Embrace intentional spending.
My daughter was teasing me that this is just a nice phrase for being ‘kuripot’ (tightwad), but I beg to disagree. Intentional spending means always following your money trail. No impulse shopping or unplanned expenditures, especially for wants or luxury items.
I used to go to a mall and shop when something catches my eye, now I avoid even window shopping and visit my favorite stores only when they are on sale. And not on the first day of sale too — I go two weeks into their sale when items have been marked down further. The items may be one or two seasons old, but I am not aiming to be in fashion or fashionable. My patience for waiting out sales covers almost anything from plates to oven toasters to bathroom fixtures.ADVERTISEMENT - CONTINUE READING BELOW
#7 Learn to say no.
This is not easy, but you will need to be firm. No to a second car or the latest mobile phone. No to branded handbags or designer shoes. No to a bigger TV set. No to a lavish birthday party.
Your success here will depend on your family’s support, so get them involved too. Sit your children down and explain to them how the family finances will change and what they can do to help. Whatever their age, they can contribute to making things easier for your family.
Aneth Ng-Lim began her career as a writer and happily returns to her journalism roots after working as a communications specialist in the government and the private sectors. While working for a bank as a consumer education head, she honed personal finance skills and increased her money smarts. A woman empowerment champion, she is a proud mom to two teenage daughters.ADVERTISEMENT - CONTINUE READING BELOW
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