With COVID-19 causing pay cuts and job losses, here’s a handy guide to ensure a smooth transition from a double-income household to a single-income one should the situation arise.
There’s no doubt that two incomes help create a nice financial cushion for married couples. It’s only natural to be disheartened when one member loses his or her job. However, it’s surely not the end of the world. In fact, couples should have an action plan in place even before a job-loss situation arises.
Switching from two incomes to one doesn’t have to be as bad as it sounds – all you need is a solid transitional plan. Think about it; with a good plan in place, you’ll be giving your significant other an opportunity to even take career breaks.
Additional Reading: 5 Money Management Tips For Married Couples
Here’s how you can fool-proof your transition from a double-income household to a single-income one:
Needs Over Wants
It’s only human for us to shop more and spend more as our purchase power goes up. While there’s nothing wrong in this, one should be able to immediately switch gears if the situation demands. For instance, with two sources of income, the ability to spend money is more. When this gets reduced to a single-income source, your ‘wants’ will have to take a backseat.
Priority should be given to your needs. This way, you’ll be able to keep frills at bay while still being able to secure your needs with just one income.
Additional Reading: How Married Couples Divvy Up Their Expenses
Fall Back On Savings (Not Completely)
If you’re reading this, we hope you’ve saved enough for a rainy day. It’s always good to have extra money that you can use when you’re in need of it. However, don’t go overboard and treat your savings as if it’s cash that can let you continue living a two-income lifestyle. Instead, use it only if and when you feel the pinch of adjusting to a single-income household.
Of course, as a last resort, you can always partially withdraw your PF should you need cash.
Ensure Your Medical Insurance Coverage Is In Place
In job loss situations, the last thing you want to face is medical expenses. Most employers offer their employees a medical insurance plan that covers their spouses, so you’re most likely covered if your spouse’s medical plan is active and running.
If your spouse works in a small setup that doesn’t provide these employee benefits, it’s a good idea to take up a Health Insurance policy – you might as well pay premiums rather than bear the brunt of huge hospitalisation bills, right?
Additional Reading: Tips To Manage Your Money During A Career Transition
Use Credit Judiciously
Debt can be a silent killer, especially when your ability to repay has weakened. If you’ve lost your job but have debt to pay, you’ll still want to ensure smooth flow of EMI payments via your spouse – you don’t want your Credit Score to go for a toss, do you?
Also, taking up more debt is not advisable at this point, as this may cause undue stress. Having said that, you can always use your Credit Card if it helps you save extra on buying necessities using it. In conclusion, sensible credit use is highly advised.
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