Starting a family on a single income can be a tough thing to do! You have to fit in all of your expenses under one single amount. And this is exactly where I salute all the stay-at-home mommies and wives out there. Your ability to adjust to any situation and manage family finances, no matter the income, is amazing!
Today I want to discuss the hidden art of living a frugal life and planning for retirement when your sweet family has only one paycheck coming in.
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Never underestimate the income you have
This is the best way to handle your finances. The moment you are surrounded by a sense of frustration and desperation and you begin to believe that you can do nothing with the income you have, you lose.
You cannot win the money game with that mindset.
Be confident. Believe that even if you have a low income, you can still squeeze you the most from it. The only thing you really need to compromise on is overspending.
Frugal living isn’t just about manipulating expenses. It’s more about increasing savings.
That’s why no frugal lifestyle is complete unless you are successful in building up your savings for both your present life and your retirement.
So, be positive and rely on the household income you have!
Start building separate savings accounts & direct most of the extra income you have to them
Your retirement is going to be created from what you save today. Therefore, picking up good savings habits and turning them into your new reality is definitely the best thing you can do.
Open three separate savings accounts. One for personal savings, one for emergency savings, and one as a backup in case the other two accounts are compromised.
It might seem difficult or downright impractical, but if you follow my words and realize what I’ve written isn’t complete crap, you’ll find yourself on your way to a happy retirement.
You might be wondering “why isn’t this guy giving me tips for frugal living?”
Even big investors like Warren Buffett practice frugal living. They do so to increase their savings and net worth. This is something worth remembering! Rich people live frugal lives.
How living a frugal life can fuel up your savings
Considering you only have one line of income, my suggestion will always be to find other ways to earn extra cash.
However, if your family situation doesn’t allow you many opportunities for a side hustle, you need to fix things within your current income amount.
You aren’t a child, so I won’t talk much about this or give you advice about what you should or shouldn’t purchase.
I can only tell you one thing: You need to differentiate between “needs” and “wants”. If you can understand the difference between the two, then you are on the right track to a frugal life!
A couple pairs of jeans and a few shirts or blouses can fall into the “need” category, but upgrading your closet every other month is definitely a sign of “want” and excessive spending.
Household staples like fruits, vegetables, and meats to feed your family and the supplies needed to keep your home in good running condition are definitely “needs”. Eating out every day, buying expensive Swiss chocolate bars or purchasing your favorite bottle of wine every weekend aren’t “needs”. Those are extra expenses that we purchase for our own pleasure.
Start cutting down on your expenses by going without whenever possible. Use cash and avoid credit cards as much as you possibly can.
Make up your own budget and make it play for you
Being a modern woman, you should know how today’s ladies are looking at budgeting, saving, and debt.
Conventional budgeting techniques like 50-20-30 and the envelope strategy have grown a bit old.
Today a lot of women are using the backward budget. They see savings as their financial strength and they know that debt is an aggressive money eater.
Strategy aside, form a budget that helps you to build your savings, pay off debt, and plan for retirement.
That’s what frugal living looks like. If you can’t create a budget and stick to it, you can’t be frugal.
Finally: Plan for retirement the right way
Always take advantage of an employer-sponsored retirement plan if you or your spouse receive such a benefit. Your employer’s contribution is free! Take it!
That being said, and given you have a single income, your best option is definitely a personal saving plan.
Ideally each year you should invest 25-30% of your total income into savings.
You can also look into the stock market and share investments, but that can be a bit more costly.
Ultimately, don’t forget to own your house outright. That’s the best investment you can make.
About the guest author:
Andy Masaki is a blogger and financial
writer associated with the Oak View Law
Group. He is a debt expert and a
member of several online forums where
he shares his advice as well as tips
to lead a financially independent life.