How To Prepare For Your Household Income To Drop
Many families have to seriously look at their budget once their first child comes along. The cost of childcare care can be really high, so for some it’s not economical to return to work and have to pay for childcare. For others they want to look after their child themselves; they don’t want to pay someone to do it while they’re at work.
If you are going from a two-income household to one income, you may be worried that your budget won’t stretch. Below are some steps you can take to make the transition easier.
Debt
Start with avoiding debt. It’s all too easy to call on credit to make up the wage deficit but this is a big mistake to make. Credit cards have to go. They are way too tempting to have around when you are trying to cut back on your spending. If you do have some debt then try your best to get this down to a manageable level while you still have two incomes coming in.
Income & Expenditure
Know where your money is going. If your income is going to drop, you need to fully understand your finances. Sit down and write down all your expenses. As well as bills, make sure you include money for birthdays, special occasions, haircuts, holidays, coffee shop visits, etc.
Get The Best Deal
Use comparison sites to make sure you’re on the best utility tarriff, broadband package, etc. If you rarely upgrade you’re phone then a SIM only mobile phone contract might be a better option for you. Also check cashback sites, like Quidco & Topcashback, before making any purchases.
Cut Back
Cut back on unnecessary expenses. For example, do you really need a SKY subscription if you only ever watch Netflix? Once baby comes along will you need your expensive gym subscription? Every family is different, but think about what’s important to you and what you can cut back on.
Earn Extra Money
There are lots of ways of bringing a little extra money into the household without going out to work. Ebay, Vinted, etc. are great ways of de-cluttering the house while bringing in money. Online surveys, like Prolific, can be done around the children and the money soon adds up.
Emergency Fund
Every family should aim to have an emergency fund as life is unpredictable. But if you are reliant on one income, it’s even more important to have this buffer. Ideally you should have at least three months worth of expenses in an emergency fund. That way, when things go wrong, your budget won’t suffer too much.
