7 Tips for living on a single income

However, it’s possible to make the most of a single income and live comfortably from it; you just need to be savvy about your money, have a positive outlook and make informed financial decisions.

Let’s take a closer look at how to balance your wants and needs and which financial essentials need to be part of that.

• Evaluate your financial situation
  Understanding how much you need and how much money you have to cover those needs is the basis of any financial moves you make. Once you know the baseline, you can determine what your budget needs to include and how much should be allocated to which line items.
• Set a realistic and sustainable budget
  Effectively managing the amount of money coming in will help you stretch your salary. It’s important to know where every cent goes and that you are intentional with your spending as you don’t have any extra.
  
  First, you need to determine what is coming in and going out of your bank account so you can create a plan from there. Look at the last 3 months’ statements so you can create a comparative view and see what you’re dealing with:
  • Determine what your take-home salary was (after tax and deductions).
  • Organise your expenses into categories, everything from your fixed expenses (the things you have to pay for, i.e. housing and utilities) to variable expenses (things that cost different amounts monthly and you might not need every month, i.e. household expenses) and your discretionary spending (what you spent on going out, eating out, shopping etc.).  
  • Look at your average spending and see how that compares to your average income.
  • If your spending exceeds your income, go back to those categories and see where you can cut back or make changes.;
  • You might have to adjust your spending or make changes to your lifestyle.

Use our Budget Manager add-on on our Banking App to easily create a budget and stay on top of your spending.

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• Make room for savings
  Budget for spending and an emergency fund. Having money in reserve gives you a safety net and comfort knowing that if something happened, you would be okay. If you’re already stretched financially, the added financial impact of an unforeseen event could put you in a situation that would be more difficult to get out of.
  
  A little goes a long way. If you don’t have any savings, look at our 4 steps to start saving from scratch.
   

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• Prioritise essential expenses
  Having your basic needs met first, and in order of importance, will ensure your expenses and needs are taken care of on time, reducing the risk of financial stress that comes from overspending and then not having enough to cover your essentials.
• Stay away from debt
  If you have existing debt, include a plan to reduce it within your budget. Paying it off will free up your income, and high-interest debt will just become more expensive, putting a drain on your resources.
  
  You need to be mindful about what you’re spending on and why. Be clear on your needs and your wants so that you don’t end up spending unnecessarily, increasing your financial burden or wasting money that could be used to pay off debt (not make more) or for savings.
• Embrace smart shopping habits
  While buying in bulk might not be ideal for a single person, it can be effective for a family living on a single salary. Comparing prices and making the most of loyalty and special discounts will always pay off. However, be careful of deals where you get a discount when you buy more; don’t be fooled into spending more than you need just because it costs a little less.
• Invest in yourself and advocate for your worth
  Don’t be afraid to negotiate a better salary, extra benefits or different terms. If you need to increase your earning potential, find out which skills or qualifications you need to increase your value or to take advantage of greater career opportunities.

Final thought

To make the most of your single income, focus on what really matters: you and your goals. With careful planning, dedication and consistency, it’s possible to create financial stability.