How families can thrive on a single income budget

Did you know?

There are over 200,000 single-parent families in New Zealand, and many more with a stay-at-home parent – plenty are living on a single income! Whether this is just for now or for the long-term, it can be difficult to manage your finances to help your family thrive. But with careful planning and some sacrifice, it is possible. Here are five tips for families living with less money:

1. Track your Expenses – Make a Budget

First, make a budget. A budget lets you understand where your money is going, and tracking your expenses is an effective way to make sure you’re sticking to your budget.

The 50/20/30 budget rule is a good place to start. 50% of your earnings should be spent on your needs and obligations, such as rent and bills. 30% of your income should be allocated to non-essential expenses – anything that you do not need to survive. The final 20% of your earnings should be put towards financial goals, such as paying down your debt and a savings account. This allows you to plan for your family’s future and means you will have some money available when unexpected expenses come up.

Writing your expenses down will help you identify if your needs really are needs, or if they can be moved into the ‘wants’ categories. It will also show you exactly where your money goes, and where you need to cut down. This will keep you accountable.

2. Shop around for Better Deals!

Don’t be afraid to shop around and switch utility companies. Many of these companies offer temporary discounts for switching and this can be an easy way to save some money on your bills. Just make sure once the discounts run out that you’re not paying more than before.

You can also shop around for better deals on your loans too. Combining all your debts into one (debt consolidation) can make your repayments easier to manage and, sometimes, cheaper too. But keep an eye out for early break fees on your loans!

3. Enjoy Free Entertainment

Living on a single income does not mean you have to give up those important days of family bonding. There are plenty of options for free family fun: you just have to know where to look. Websites like The Urban List and Eventfinda let you know what’s currently on in your area, and there’s always a plethora of free events that you may not have heard about!

If you’re a single income parent, there are some great opportunities to bond in your day-to-day with your kids. Spending quality time doesn’t need to mean going out. Devoting time to family hobbies or home improvements can be just as valuable as family activities. “Spend time, not money” is a good motto to live by.

4. Plan you Meals in Advance

Food can be expensive, especially for a family.  Planning your meals can drastically reduce costs, so it’s an easy way for a single-income family to cut down on their spending. When you know what you are going to eat, you’re less likely to impulse-buy takeaways in favour of sticking to your meal plan. Planning similar meals for the week is also a good way to save money. This allows you to buy food products in bulk and use them all up, rather than buying a wide variety of food products.

Cutting out junk foods can be a great money saver! You don’t need these foods, and spending your food budget on fruit, veges, meat and fish will benefit your health and your bank balance. However, the aim is to keep your budget liveable as well: the kids might not have an easy time switching to the cheaper (but less junky) foods. Ease them (and yourself) into it.

5. Create an Emergency Fund

From the 20% of your income that you are saving, you should allocate some money to an emergency fund. When you are a single income family, you don’t have the safety net that a dual-income family has, so having enough money tucked away in case disaster strikes means you won’t have to worry about not being able to pay your bills. It’s even better if you have two funds: one for one-off unexpected expenses, the other with enough money for 6-12 months’ worth of expenses, just in case the single income drops to no income.

If you manage to stick to the tips you will find that, despite missing a few conveniences and the occasional material ‘want’, you can thrive on a single income budget.

Also check out our other budgeting article: 6 Key Categories Missing from your Budget

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