How to make single income families work

Text Cindy Tong

For newlyweds, Shern and Lynn Loh, the news that Lynn was expecting barely one month after their wedding was a shock.

Lynn recalls, "We were planning to have kids, but we intended to wait until Shern's career stabilised. I also wanted to make sure we had saved enough money for baby's expenses, which can be quite hefty in the first few years."

Nine months later, Lynn resigned from her well-paying job as an account manager in an advertising agency, so she could stay home and take care of her unexpected bundle of joy.

"We agreed that I would be a stay-home mum. Going back to work just wasn't an option. Both of us decided we would simply cut back on eating out, watching theatre performances or buying fancy clothes," she says.

What experts say
It might appear difficult but financial planning experts say that living on a single income is not impossible. Raymond Ong, a certified financial planner with Manulife Financial says, "It's a matter of simple common sense. You earn less, you spend less."

He adds, "The hard part is making do with less cash. The reality is that most couples have been used to a certain lifestyle. The real challenge is learning to downgrade your expectations and live within your smaller means."

When adjusting from a dual to single income, families should get their priorities right. Family needs and wants need to be determined and household spending allocated accordingly. Living within a smaller budget does not mean that you need to give up all of life's little luxuries. It's a matter of finding inexpensive alternatives.

Financial experts advise families to also invest some money in an insurance policy that offers comprehensive coverage in case of death or disability.

Ong says, "It is important to remember that instead of two income earners, the family is now relying on just one." In this case, insurance policies offer financial protection for the family should something unfortunate happen.

As a general guideline, it is best to set aside 20 per cent of the family income in savings each month. These can serve as emergency funds to tide the family over in times of need or difficulty.

A worthwhile trade-off
Although she has had to adjust to survive on a single income, Lynn says that the trade-off has been more than worthwhile.

"The whole prospect of being around when my baby takes her first step or says her first word is incredibly thrilling," says Lynn. "I would rather be around to see it all, than to be working in my crummy office and have to hear about my child's firsts from someone else."

She doesn't even worry about her future employability, should she decide to return to the workforce. "It's always possible to look for part-time work or talk to your employers about doing work on a project basis. In fact, this is what I am exploring with my former company," she adds.

"I don’t think this is a worry at all. With the emphasis that the government is putting on families to have kids, I think it's only a matter of time before employers become more open to flexibility in the workplace. It can only benefit stay-home mums like myself."

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