Top 4 Money Hacks for One Income Families

Money Hacks for One Income Families

In the world we live in today, everything is getting more and more costly. As a result, most families need numerous or more than one earning member. In the case of families having a single income source or earning member, things are quite different. 

Starting from the source of income, to expenses and budgets, a rigorous planning is necessary. Even if the source of income is huge, proper money handling is very important. Here are some effective money hacks for one income families. 

Hack 1: Proper budgeting and expense tracking

The first thing to do as a one income family is create a budget. The budget must be according to the level of income. While making a budget, it is sometimes important to cut corners. The budget should primarily focus on the daily needs and expenses. Make sure you do not add anything unnecessary to the budget.

To make sure that you don’t spend out of budget, tracking or keeping records is crucial. You must keep a record of every single expense. In addition to that, keep track of every bit of money, whether it is earned, saved, or spent.

Hack 2: Savings are always helpful

After spending according to the budget, there is a good chance of having an extra amount of cash in hand. In such cases, the wisest thing to do is save that money. However, it is not wise to consider leftovers as savings. 

The smart thing to do is setting aside a certain amount from the monthly income. As a result, some cash automatically builds up. However, upon acquiring large savings, the chances of spending on a frenzy rise in many. In such scenarios, the issue of emergency expenditures must always be considered. Savings can be great blessings in times of emergency. For example, in cases of medical emergencies and huge-scale debts, savings can remove the burden of expenses.

A very significant form of saving is investing in life insurance. It ensures the security of the non-earning members of the family, in the event of the earning member’s death.

Hack 3: Sort out major expenses

Like daily needs and expenses, the major expenses require severe attention. Major expenses can comprise debts, taxes, mortgages, or any form of debt. If a person having loans is the only earning member, his or her death will put the other family members in a huge problem.

As a result, paying off debts is a great issue for one-income families. In addition to that, expenses such as school fees, and medical bills also fall in the category of major expenses. However, major expenses vary from one family to another. 

Hack 4: Be tactical while spending

Spending according to a budget is not the only way of reducing expenses. Being tactical makes it much easier. Avoiding home deliveries is a good way of reducing costs. Instead of being lazy and ordering online or via phone, getting the parcel yourself is a good way. However, there are always exceptions.

Avoiding credit cards is also an effective method. Credit card charges and debts can easily cause a person to run low on cash. Completely avoiding credit card usage is not mandatory. As mentioned earlier, tracking is crucial here. As for credit card debts, one must treat them as a major expense. 

In day-to-day expenses, you have to be very strategic. For instance, instead of buying vegetables, and dairy products from a super shop, you can go to the farmer’s market. This way one income families can afford the same things, but fresher and at a lesser price.

The Bottom Line

One income families do not necessarily need to lead a very strict life. All it takes is to be strategic and cautious. Pre-planning and these money hacks for one income families can help family live a more disciplined and comfortable life.

Related Reading: 7 Types of Income and How They Can Change Your Future

7 Types of Income and How They Can Change Your Future

Types of Income

Everyone wants to increase their income. This is true for those starting out, those with a decade’s experience, or those thinking about retiring. But when they say they would like to have more money, few ever say what are the types of income they would like to have. Or what income they would like to increase.

If you’re salaried, you’d be conditioned to think that that’s all your income can be. It would be pretty much the same if you’re self-employed. The first thing you have to understand if you want to increase your income is that your paycheck is an income and not the only income you can have.

The Different Types of Income

1. A side gig

Aside from your primary job, you could do a freelance job or work during the evenings or weekends. These could be tied to your area of expertise. For e.g., if you work at a gym, you could part-time as a personal fitness instructor.

2. Create a physical product

Maybe you’re great at designing jewelry or phone cases. If you can do it as a side hustle and find sellers either online or through brick and mortar stores, that’ll be an additional income for you.

3. Real estate

The housing market is hot right now. This will be an appreciating asset if you research well before you buy. If buying and flipping it sounds expensive, you could look at commercial real estate. Most of them are at their lowest due to remote work.

4. Stocks

One of the types of income that is popular among the youth is stock. This requires some expertise, but the good news is that almost everything to learn about stocks is available online now. If you do your homework and are patient to stay in it for a long time, your investments will start paying dividends well into your golden years.

5. Blogging

If you believe you have enough expertise in a field to share with others, you could start a blog. It will take some time to build traction and get enough followers. But once you have a sizable following, you could earn income from ads or affiliate marketing.

6. Digital Publishing

While blogging is the gateway, what can build a brand out of you is digital publishing. If you can write a book – a short book will do – on a niche and market it well, you could be looking at a passive source of income for years.

7. Start a business

It would be better if you can invest in a business with others. That minimizes your risk while building another stream of income. What’s better, if you decide to sell your shares later, you’ll be making more money out of it.

The more sources of income you have, the better off your finances will be. Therefore, if you want to increase your income, you should have a clear understanding of the different types of income that you can earn. Hopefully, the above list has been of help.

Related Reading: Multiple Streams of Income You Can Build Today

6 Money Habits for a Richer 2021

Money Habits

It’s the New Year, and for many, a time to reflect and set new goals. According to a recent survey on spending habits, “63% of respondents lived paycheck to paycheck in 2020.” Developing effective money habits are crucial for a healthier, wealthier future and something anyone can achieve with discipline and practice. Below are our top six money habits that will set you on a path to financial health in 2021. 

Identify Your “Why”

Before you do anything else, carve out time to identify why you want better money habits. Do you need to get out of credit card debt? Are you hoping to retire early? Do you want to provide a better future for your kids? Travel the world? Your why will be that little voice keeping you on track when you want to stray from your goals. 

Track Your Spending

This is a must-do if you hope to have better spending habits. Find a time every month, week, or even day to go over your spending in relation to the money coming in. Create separate categories for different kinds of expenses. You will likely have a fixed category for expenses that do not change like your mortgage or car payment. Develop other categories for expenses such as going out to eat, entertainment, and shopping. You might be shocked at how much you are spending in some categories!

Set a Budget

Now that you understand your spending patterns, set a budget for each of your categories. Paying in cash or with a debit card is much easier to track and keeps you from the constant debt cycle that comes with using a credit card. Keep your budget accessible so you can refer to it when you need to. Mint is a great app for keeping track of your budget. 

Create Small, Achievable Goals

Instead of making one goal for the entire year that might be abandoned 6-months in, make a 90-day goal with clear directions on how to achieve it. Some examples could be paying down a specific debt, saving a certain amount of money, or any other tangible goal that aligns with your “why.” By creating a deadline, you are holding yourself accountable and breaking down what may feel like a large, daunting task into bite-size pieces. Your goals may change throughout the year, so re-evaluate them every 90 days. 

Pay Yourself First

This piece of advice, made famous by Robert Kiyosaki’s famous work, “Rich Dad, Poor Dad,” feels counterintuitive but is a life-changing habit to adopt. Each time you get paid, put a percentage of that money in savings first before anything else. While challenging at first, you’ll be amazed at how your spending adapts over time. You may also surprise yourself with how much you saved over the year!

Learn About Money

Lastly, healthy money habits are a continuous learning process. Read a book, attend a seminar, surround yourself with financially savvy people. Invest in your financial education and you will see results. 

Management Tips to Get The Most Out of Your Credit Cards

Couple sitting in the park with credit card

Whether you’re trying to establish or improve your credit history, a credit card is a viable solution. They’re a lot easier to qualify for than a personal loan and can be used as many times as you’d like to make purchases (as long as you continue to pay down the balance). However, all too often, people obtain credit cards and mishandle them, resulting in an accumulation of debt and poor credit history. 

Essentially, the most effective way to reap the benefits of being a cardholder is to be financially responsible. Whether this is your first or fifth credit card, the tips listed below can make credit cards more comfortable to manage. 

Select The Right Card

Not all credit cards are the same. As such, it is essential to do research to determine which is best for you. More than the credit limit, you want to apply for a card with low-interest rates, minimal fees, and perks or rewards programs that you can use to your advantage. 

Review Paperwork

It’s exciting to receive an acceptance offer from a credit card company. However, keep in mind that accepting this offer is like going into a contract with the creditor. In exchange for a line of credit, you agree to repay the balance in full, along with any interests and fees. So, before signing on the dotted line, however, you should review all the paperwork. You want to ensure that you’re aware of what you’re getting into. 

Develop a Management System

To be a responsible cardholder, you must develop a system to keep up with your accounts, due dates, and payments. When you’re unaware of what you’re spending, when payments are due, and how much is owed, you run the risk of missing payments. Missed payments then lead to late fees, penalties, accrued interests, and a negative credit rating. 

Fortunately, there are several strategies and tools to manage your credit card accounts. You can install a debt payoff app that can assist you with payment reminders, automatic payments, and late payment protections to keep your accounts in order. You can also use debt management apps, calendars, and automatic bill pay services through your local bank. 

Make Timely Payments

It can’t be stressed enough how important it is to pay your credit card bills on time. Review your card statement to identify the due date. Then set up automatic payments or put a reminder in your calendar to ensure they are paid by that date. If you’re short on funds for one month, at the very least, you should pay the minimum amount to avoid late fees and poor credit ratings. 

Keep a Reasonable Balance

Just because you have a credit card with a $1,000 limit on it doesn’t mean you should spend the entire $1,000. Most account holders fail to realize that the utilization rate is a factor used to calculate your credit score. A utilization rate is how much you owe compared to your card’s credit limit. Lenders and service providers use this information to determine your ability to handle your bills. Keeping your credit card balance at 35% or lower is advised. So, if you have a $1,000 credit limit, you try and maintain a balance of no more than $350. 

Make Informed Purchase Decisions

When you have an extra few hundred or thousand dollars, it can be tempting to spend it on things you really want. What’s important to remember, however, is that you have to repay the balance with interest. While you don’t have to pay it upfront, the interest and fees accrue over time, increasing your outstanding debt. You could spend years trying to pay off that flat-screen television or that new wardrobe you purchased. So, it’s best to make informed decisions when using a credit card. If it’s not something you can repay in a few months, chances are you should wait. 

Credit cards can be a real gem when used correctly. They can be the foundation for establishing credit, enabling you to acquire anything from loans to affordable car insurance without an issue. To reap the benefits of credit cards, you must manage them responsibly using tips like those provided above.