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Whether you're planning to be on one income for a few months, a year, or longer term, the idea of a reduced household income can be very daunting.
Getting your head around the idea of one income comes down to one thing: budgeting.
Doing a budget is one of the most important things you can do, with the reward of being able to enjoy your baby without financial stress.
Here are some ideas for getting that budget in shape, ready for being a one income family.
1. Prepare as much as you can
First, set out the things you can foresee. Research shows that healthcare and clothing costs are the two biggest cost increases in families with a new baby, so budgeting for those things is a good place to start.
2. Plan for the unplannable
Unexpected costs are inevitable. You know the ones: the minute you're on one income the fridge will die, or some unplanned event will come up that has you saying, "Uh-oh!"
It's worth stashing some money aside for those things you can't foresee, so you can instead say, "We've got this".
3. Trim your costs
Planning to go down to one income is the perfect time to get very familiar with your expenses, and how you can reduce them.
Ask yourselves:
- Where are your costs at now?
- And where do they need to get to for you to live on one income?
- How can you reduce your biggest expense – homeloans? Some financial intuitions allow you to pause your homeloan.
If you need to cut some costs, start by ringing around to compare prices on your current expenses; make sure you're getting the best deal on your car insurance and home insurance premiums, as well as your electricity and gas rates, internet and phone plans.
There are many other small but effective ways to spend less during the time you're on one income. One example is to cook up some meals in bulk, and store them in your freezer. That way, whenever life with a newborn gets hectic (and it will!), you can reach for a pre-cooked meal instead of the takeaway menu.
As well as cutting back, it's worth thinking outside the square for some ways to afford being on one income. Is there anything lying around your house or garage, for example, that you can sell? A quick injection of cash could help to fund some living expenses or be put aside for those 'just in case' costs.
4. Add in the new expenses
What will a baby cost you? It's hard to know an exact figure, but start by thinking about expenses like nappies, formula (if relevant to your situation), clothes and medical appointments.
You might also have increased electricity and gas bills while you're at home, not to mention some extra food to cater for that post-baby, breastfeeding (if that's what you're doing) appetite!
5. Budget in the things that will help you
Your physical and mental health is more important than words can describe when you have a newborn. While it's tempting to cut the 'luxuries' from your budget when you're reducing your income, try to throw in a few little things that will give you a mental boost when you need it.
It might be that you'd like to budget for two massages during your maternity leave, or there's a postnatal exercise class you think will be good for you. Give yourself permission to prioritise some things that will make you feel good.
Living on one income can take some adjustments, but it's worth the effort of budgeting so you can ease your mind.
This article is sponsored by CUA