Many South African families have had to adjust to living on a single income due to job loss or a reduction in income during the nationwide lock-down. School fees, food, electricity costs and other essential expenses remain, and you may find that your income no longer stretches far enough. Here are some tips to on how to make the most of one salary.
Budgeting is truly the key to good finances. You are telling your money where to go, and this allows you to see exactly what you are spending it on. Since you have lost one source of income, it is time to adjust your budget to suit your current needs and consider your new income. You can deduct work related expenses from your budget such as commute to work, lunches and childcare as well as other expenses that are no longer needed. It is also important to factor in an amount for savings, this will ensure that you are covered no matter what happens. If you are married and your partner has lost their job, check if they are eligible for any payment from the UIF.
Having an emergency fund can reduce your stress when living on one income. It will ensure that you are ready for any unforeseen expenses such as a car repair or a medical expense. You should work towards 3 to 6 months’ worth of expenses in your emergency fund, it can take time to build but it is worth it. It is a good idea to set aside an affordable amount each month from your budget to put away into your emergency fund. Read more on emergency funds here.
Cut costs you don’t need
Now that you’ve figured out your budget and decided on what you can cut back on, you will be able to decide where you can cut costs and what you can actually afford with your single income. A great way to make these difficult decisions is to print out a list of your current expenses and then circling all the expenses you can live without. Depending on your circumstances, this could be cancelling a gym membership to moving to a more cost-effective area.
Consider debt review
Paying off debts with high interest rates can become expensive. Debt review can help you to pay off your debts at an affordable rate, your debt counselor will lower your interest rates and you pay less for your debts. Your debt counsellor will also take your single income and expenses into account and come up with an affordable repayment plan. This way you can save money every month from paying off your debts whilst working towards becoming debt free. Contact Meerkat today for more! We’ll even kick start an emergency fund for you.
Although you will not be making as much money due to your single income, you can now devote more time to family which, in turn can save you money. You may now not need a housekeeper or childcare for your kids because you or your partner will now have the time to do it yourselves. Even cooking lunch instead of getting take-out because previously you had no time to cook. You can now also devote time to rejoining the work force, even free-lance jobs are a great option to make any extra income that you can.
These are just some of the things you can do to adjust to living with a single income. We’d love to hear your ideas on how to make it work.
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