How to go from a dual income to one

Published on 27th March, 2024 at 06:19 am

Moving from two incomes to one takes careful planning – here are five steps to handling the adjustment.

Estimated reading time: 5 minutes

In this article, you’ll learn:

• Who to talk to about your new financial situation
• How to adjust your budget from two to one incomes
• How to look after your mental wellbeing

 
One less income is an adjustment for any household, no matter the reason for change. Maybe you and your partner decided that one of you would stay home to care for the children or work on launching a business. Perhaps someone fell ill or lost a job, or you got a divorce. Whatever the reason, it’s important to relook your budget, however scary it may be. Knowing you are prepared and informed about your new financial situation will not only help you cope with budget changes, it will also help alleviate stress.

“Adjusting to a change in income can be challenging, but there are a few things you can do to manage your situation,” says Riaan Crowther, senior financial planner and associate director at Sleewijk BlueStar, which provides financial services authorised by Sanlam. The steps you can take immediately include:
 

1. Inform your financial management team

– Your financial adviser:

“It is important to reach out to your financial adviser to discuss your situation. They can help you reassess your goals and create a new plan. Your life insurance and income protection policies have to be updated to your new financial situation and your retirement goals need to be revisited,” Crowther says.

– Your bank:

“A loss in income will have an impact on your loan and/or mortgage. You might need to discuss loan deferment options or restructuring repayments with your bank.”
 

2. Reassess your medical aid and insurance policies

“If you’ve lost medical aid cover because it was covered by your partner’s employer, you will have to explore alternative options,” Crowther advises. “Short-term insurance cover and payments can also be adjusted according to your income and financial situation. You should contact your broker for more information.”
 

3. Reconfigure your budget

“While it’s always good financial sense to have six months’ expenses saved in an emergency fund, it is important to use it judiciously and prioritise your expenses,” Crowther cautions. “Trim non-essential expenses, such as subscriptions, dining out, and entertainment. Focus on necessities like medical aid, groceries, debt, and fuel.” If you can, apply for unemployment benefits.
 

4. Adjust your financial goals

Your financial goals should be based on your new income and not your previous double-income plans. “Prioritise debt repayments and continue to contribute to retirement annuities or other long-term investments,” Crowther says. These are often the first things people trim for their budget, but Crowther says this will only sell you short in the long run. “Most insurance companies have options available to people who are experiencing financial problems, such as premium-holiday facilities.”
 

5. Look after your mental and physical wellbeing

Transitioning to a single income household can be challenging, both financially and emotionally. Don’t be afraid to talk openly and honestly with your partner, family, and friends about your new situation. Reach out to friends, family, or support groups for guidance and encouragement. “It is also important to stay positive,” Crowther says. “Be patient with your new situation. Continue to have an open discussion with your financial adviser in order to set realistic expectations and to work together to manage your finances.”