In this week’s article I wish to delve into a question which I have been asked countless of times: Is one income enough these days? Historically, families often thrived on a single income, typically earned by the man. However, as we fast forward to today’s economic landscape, the feasibility of this model seems increasingly challenging, especially for families with children.
The shift from past to present
In the past, a single income was often sufficient to support a family’s needs. This was possible due to lower living costs, different lifestyle expectations, and a different economic environment.
Today, many families find it difficult to subsist on just one income. Factors contributing to this include:
- Inflation: The rising cost of goods and services steadily erodes the purchasing power of a single income. From housing to education, expenses have skyrocketed, making dual incomes almost a necessity.
- Lifestyle changes: Today’s standards for comfort and success often include elements like advanced education, technology, and leisure activities, which come with added costs.
- The family: Consider a couple living in a city with two children. Despite a reasonable income, the costs of housing, childcare, and education stretch their budget thin.
- The single-parent challenge: Single parents often struggle to provide on a single income, balancing work and childcare responsibilities. Government benefits help, but it’s often not enough.
- High-earning individuals: In some cases, one partner earns significantly more, comfortably covering expenses for the entire family. However, this is less common and often tied to high-stress, demanding jobs.
- Budgeting is key: Regardless of your income level, effective budgeting through a Forecast Spending Plan can help manage finances better. Track expenses, prioritise needs over wants, and plan for savings.
- Investment and savings: Explore investment options to grow your savings. Even small, consistent contributions to a retirement fund or stock portfolio can make a big difference long-term. Remember it always starts with a habit, and the enhancement of such habit (in this case putting money away for investing)
- Side hustles: Consider supplementing income with part-time work or a side business. This can provide financial cushioning and diversify income sources. One of the things I really believe in and which I emphasise a lot on in my session is monetising your talents.
- Education and skill development: Continuously upgrading skills can lead to better job opportunities and higher earning potential.
The question of whether one income is enough is complex and varies greatly depending on individual circumstances. I tend to see one income at present as more challenging than in the past especially in the case of a family. However, with a proper Forecast Spending Plan and also increasing your income through side-hustles, I believe that anyone can meet such financial challenges in a better way.
Follow Luca Caruana’s weekly column here, and his LinkedIn account or his Instagram for more budgeting hacks. For other money-related columns, check out Luca’s thoughts about the girl math trend and his advice to couples who argue about money.