How to Manage Finances on a Single Income

Managing your finances on a single income, especially when it is a switch from a double income, sounds challenging. It can make you feel like you are moving into bankruptcy, your dream travel plan is becoming a mirage and your family is about to begin eating cereal for dinner. But, it is not that dramatic if you approach it with proper planning and foresight.

Instructions

1. Discuss money management with your spouse. Finances are the primary cause of friction in a marriage. Communicating concerns and suggestions helps to set spending limits, jointly work on saving and work towards reaching the common goal.

2. Track your expenses three months in advance and draw a budget that works around your income. Foresee new commitments like starting a family, buying a new house, vacations and education and accommodate them in your planning.

3. Allocate 10 percent of your income for savings before accounting for the expenses when you plan the budget. Set aside 35 percent of your income toward your house, 15 percent to pay down debt if any, 15 percent for transportation that includes gas, insurance and maintenance and 25 percent for living expenses such as utilities, groceries and entertainment.

4. Watch while shopping for groceries and purchase fresh ingredients to cook from scratch at home. Prepare a list for the entire week and follow it strictly while shopping. Invest in a freezer and stock it up. Have your working spouse take lunch from home.

5. Focus on paying down your debts and expanding your savings account. Opt for a credit card with a lower interest rate. Ask the card company to waive the annual fee if there are no special offers like frequent flyer programs attached to the card.

Tips & Warnings

• Avoid incurring late fees on regular expenses by tracking the cycle or making automatic payments through your bank.