5 Moves To Making The Most Out Of Your One-income Salary

This is a guest post from Ally. Ally is part of the team that manages Budgeting Spreadsheet and How To Save Money, both personal finance blogs based in Sydney, Australia. Before joining BS & HTSM, Ally was a Media Planner in McCann Worldgroup Philippines, Inc., with award-winning executions, including the Levi's 501 "Live Unbuttoned" global campaign.

Throughout your life you move from being single to being in a relationship, and very often parents (if you are of a certain age) would berate you with age-old chestnut of ‘Two can live as cheaply as one!’ Of course they weren’t just angling to get you out of the house! But even in a relationship things are not always simple.

At some time, it is possible that two will become three and that means only one thing – living on a single salary but having to feed three mouths.

You can almost imagine the feeling of panic; “How are we going to cope? What if we can’t afford the rental?” - And many more of the same, maybe you got laid off. What can you do to prepare and manage on a single income?

First off, it’s critical that you understand what you have coming in and what is going out – and this is the single best bit of advice that can be offered. There is a wonderful quote from Charles Dickens’ ‘David Copperfield’ way back in 1849; “Annual income twenty pounds, annual expenditure nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” Just about sums it up doesn’t it?

So best tip No 1 – Budget, budget, budget!

Next, I would look at any debt that you have – four basic kinds in descending order of interest and ascending order of ease; store cards, credit cards, loans, and overdraft. Look at what you owe and try to restructure it and, if you know you will be able to pay it off, quickly go to your bank and get an authorized overdraft – that way it can be managed more easily. If you can get down to zero then I would return the highest interest charging cards, keep the lowest and only use it for dire emergencies.

Whatever you do try not to be tempted to take out a ‘payday’ loan – they are easy to get but go over the due date and the interest will be crippling. If necessary, get a lower interest debt consolidation loan or maybe a second mortgage to lower your monthly payments while you are paying off the higher interest stuff.

Tip No 2 – restructure any borrowings.

In days when things were less economically stressed we could afford life’s little luxuries like a new car, nice clothes and vacations – depends on your particular circumstances, you still might be able to, just by trimming the level of ‘luxury’ from, say, an exotic couple of weeks in the Caribbean for two separate weeks in L.A., New York or another city based stay. Plan your trip in military precision – surf the web for the best low-cost flight (just remember the extras), find a hotel or motel chain that is recommended at, say, 4 stars not 5.

If you have a cell phone each, a landline and maybe Internet separately, look to the web to find a package that really suits you – do you really need three phones? There are providers out there who will, for a small contract charge, bundle them all together – just be aware of the tie INS. It is possible that you can get a dual cell-phone deal that will allow you to abandon the landline altogether, but think about how you can connect to the web.

Now that the synergy has kicked in – you really have managed to make 2 + 1 = 1 (single income that is) – look at how you are spending on clothes; is it really that important to look like a fashion statement – I have bell-bottom jeans from the 70s that wouldn’t look out of place today if I could just get the darned things on!

It’s a horrible phrase, much associated with companies going to the wall, but try to downsize your cable service to a lower level, did you really need the movie channel and all 65-sport channels. If you read a lot, is there a library close by or a book-lending club – or maybe invest in an e-reader (they are getting cheaper and better) and buy from one of the online sellers, the savings are very good.

One of the joys of having a single income, and it matters not whether you are the breadwinner or not, is that it marks a seismic shift in the way you live. You have to recognize that things have changed and that the old ‘order’ is no more. Embrace it, change your buying habits – instead of going to the supermarket, and look to the home-shopping revolution. By looking at what you spend, buying on the web and getting it delivered you might be able to avoid those end of gondola ‘bargains’, the ‘BOGOFs’ (buy one get one free) offers that look tempting but you may not use, if they are perishable. Begin to look at the labels and the price points, the mart’s own brand might not look as appetizing on the label but its odds on that it’s made by one of the major brand owners and if you examine the cost per ounce or kilo, you can make substantial savings – extending your single income even further.

You need to make some decisions as to what you both believe are the ‘essentials’ –the basics of life that you really don’t want to give up. Look to how you can save by clipping coupons that will extend your purchasing power.

Tip No 3 – be a little thrifty.

Make your money work for you. I know some couples who saw the coming of a single income as an opportunity rather than an issue. They looked very carefully at what they spend, where they put their, now, hard to come by income and tried to make it work for them. Each did it in their own way, but this isn’t going to be a short-term strategy and they looked at the best bank rates for savings, the best utility prices, switching mortgages, and even how they used a checking account.

Tip No 4 – make your money work for you not vice versa.

My final area is a simple one. It revolves around an old sore of ‘Do you work to live or live to work?’ Money and work are ways of keeping you afloat on this mortal coil; they are the ways of ensuring that you can keep body and soul together.

If I can say anything it is keep a tight rein on spending, one of you do the budgeting and make sure you both know where it is going. But above all, if you can afford to put a little away each month in a high interest savings account – do so. By having some savings as a safety net you will feel better about life and won’t need to worry too much about the problems.

Tip No 5 – Know where the money is going and be account smart.

By reconciling your bank account and checking off your credit card statements you’ll be fully cognizant of how you are spending your money. Take advantage of any early settlement fees and avoid installments (direct debits) where there’s a penalty. Use online banking to make the most of any credit balances. It takes but a few minutes each day to logon and move money between accounts. If your current account isn’t interest bearing, keep money in a savings account, moving it to your checking account as required.

With sound money management, you can make the most of a one-income salary.