February 13, 2009, 6:57 am

How To Live On A Single Income

by: The Financial Blogger    Category: Alternative Income,Personal Finance
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As many or you already know, I’m always trying to increase my passive income so I can work less (right now I’m working more, but hopefully it will be the opposite in a few years 😉 ). In addition to this goal, I also wish my wife could stay at home and take care of my two young children. This is the reason why I am presently building a financial plan that would allow us to live on a single income. In order to do so, I will have to increase my income (or creating alternative sources of income) and decrease our expenses.

Increase our income

Since my wife will stop working, we need to find other ways to earn sufficient cash flow to maintain our lifestyle. Here are a few ideas to make the drop of income smother:

Government allocations

Depending in which country you live, you might be able to receive bigger Government children allocations. This amount is often related to your family income. Therefore, if someone stops working, you will automatically receive more money from the Government. I know for a fact that I would receive an additional $150 per month if my wife didn’t work. Those programs are explained on your Government website.

Work at home

There are a few things that can be done as a sideline such as opening a daycare. Since my wife is presently working with children, opening her own daycare should not become a problem. Anyway, I believe that most moms can take one or two children at home in order to cover a few expenses. This option is currently on hold because we are thinking of having a third one. However, this would still be an option later on.

Create an alternative source of income

In my personal case, I will continue working on my blog and other projects in order to create a bigger monthly cash flow. Alternative sources of income are mostly derived from your passion and talent. It’s up to you to discover what is best for you.


Decrease our expenses

Living frugally is another option when you consider dropping your level of income. Here are a few tricks to decrease your expenses.

Restructure your financial situation

By consolidating your debts and bringing them to a bigger amortization, you will decrease your monthly financial obligations. Since there is no free lunch in life, you will also pay more interest. It is up to you to determine what matters the most: interest charged by banks or a better life quality at home.

Cutting on restaurants

When I first did my budget a few years ago, I was shocked to find out how much I spend in dinning out and ordering pizza! Even though we did cut on restaurants, we are still throwing a few hundred bucks a month in the toilet. The good thing is that the more we cook, the better we get and our meals are more appealing than a few years ago 😉

Make my home energy efficient

With the price of resources and energy going up, a good way to stick within your budget is to make your home energy efficient. Almost everything you have at home can be optimized. You can find out a lot of tricks from your electricity provider to help you out consume less.

There are definitely countless other ways to increase your income or decrease your expenses. In the end, it’s a matter of working smarter and be ready to make a few sacrifices. Then again, it is all about how much you are ready to pay to improve the quality of your life at home.

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Comments

Yes!!! And for now, save money while you can!!! Like you said, you need to build a solid financial plan. That’s a great sacrifice for your family but it’s worth it!!! Of course, it will be hard in the begining. Keep on going !!! There’s a reward at the end 🙂

Leveraging is vital in this case.
1- Generating passive income through investments and ;
2- Continuing to build up these investments until their passive income can support you.

Simpless…that’s easier said than done. How would you build such a strategy?

IS,

One possible strategy would be to build a leveraged investment strategy by using the Smith Manoeuvre. However, you need to be comfortable with leverage and investing in general. TFB has explained this quite well in his previous articles.

These are the kind of tips I need to look into. Expecting our first child in October and I’m sure that will tighten the budget quite a bit!

Canadian Finance,

I think kids cost about $400 a month without considering day care expenses and setup cost (such as furniture, stroller, etc.).

Good luck!!