Real Clever Moms

There are lots of reasons why families live on one income: a new baby, single parenting, the loss of a job, or simply because you want to spend more time with your children. Whatever your situation is, you can look at moving to one income in one of two ways; you can see it as time to cut back and “tighten your belt”, or you can see it as the opportunity to save money and slice your spending in half by making a few clever budget changes.

Starting with the very basics, it is absolutely essential to look at your cash flow: what money is coming in and what money is going out. The first part should be easy; simply list every penny of income you receive on a regular basis each month. This might be before you give up a second income to see if you can afford it, or this may be your single income that you are living on now.

Next comes the slightly harder part: list everything that you are committed to spending on each month, including your mortgage or rent, car payments, loans, utility bills like electricity, cable and water, insurance, groceries, clothing expenses and entertainment. Make a full list of everything that you absolutely must pay for every month. You should add a realistic amount for other essentials such as diapers for your little ones or any other costs that you have to pay on a regular basis. These are your essential monthly costs.

Now, subtract your monthly costs from your monthly income. The difference between these two amounts is your disposable cash, or how much you have to spend on everything else. Of course, this amount might actually be negative; this is often the situation for many families. But don’t worry because there are lots of things you can do to reduce your expenses. The first place to start iswith the list of items that you made for your essential monthly costs.

We all usually have a long list of essential monthly costs, so if you can reduce each one by ten dollars here and twenty dollars there it will eventually all add up to make a significant difference. In part two of this article, we’ll look at more specific ways to reduce monthly expenses.