Either by choice or circumstances, many people, especially women, may find themselves having to manage financially on a single income. Check out this blueprint to help you meet your needs and pursue your savings goals on a one-income budget.
Either by choice or circumstances, many people, especially women, may find themselves having to manage financially on one income. According to a U.S. Census report, approximately 45% of adults were single, divorced, or widowed in 2016. And of those, more than half were women. Additionally, around 30% of married mothers are stay-at-home parents, according to the Bureau of Labor Statistics.
A single-income lifestyle has its challenges, but it is possible to thrive financially with some planning and a little creativity. Here are a few tips to help you get started.
Every dollar counts when you’re a single-income household. Making a budget can be a good way to get a clearer picture of your financial situation and where your money’s going. It also helps you stay on track; you may be more likely to stick to your plan if it’s written down.
Any money left over could be put toward other savings goals or used to pay down debt. If you have a deficit, you’ll most likely want to take a closer look at the expenses. Generally speaking, when making a budget, it’s better to reduce your costs and leave your savings and retirement accounts alone.
Looking for opportunities to save money doesn’t mean you’re cheap. Rather, it’s a way to get the most out of every dollar you spend. Some ways you may be able to free up cash include:
On occasion, you may need to put some of your savings goals on hold to address more immediate financial needs. Even so, you should strive to keep funding your emergency and retirement accounts. Both are essential for pursuing financial security.
One way to do this might be to set up automatic transfers from your checking account or paycheck to your rainy-day fund. With automatic deposits, you may be less likely to miss the money. Plus, you’ll be better prepared for any unforeseen expenses. Once you’re comfortable with the amount in your emergency account, you could then look for other ways to invest your money.
The same approach may also work for your IRA. Additionally, if you participate in a 401(k) plan, consider contributing enough to receive any matching employer contributions. The match is “free” money that can potentially bolster your retirement savings. Stay-at-home parents can also invest for their futures through spousal IRAs (IRAs for non-working spouses). Due to their longer life expectancies, women should try to save as much as possible. They’re more likely to have only one income later in life.
A common misconception is that living on one income means doing without, but that’s not necessarily true. With a little creativity, you may be able to get and do the things you want.
If your schedule permits, you might consider getting a part-time job to supplement your income. This money could be used for a variety of purposes: bills, savings goals, debts, or discretionary purchases. In this gig economy, there are more flexible job opportunities than ever before, such as freelancing and ride sharing. Or you could look for something more traditional, such as working in a retail store or babysitting kids in your home.
Most importantly, embrace your single-income lifestyle—whether you’ve never married, are newly single, or have chosen to be a stay-at-home parent. Armed with a plan, it's possible to effectively manage your one-income budget, pursue your savings goals, and move forward on the path toward financial well-being. To get additional guidance tailored to your situation, call TD Ameritrade at 800-454-9272 or visit one of the local branches.
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