How to Handle the Loss of a Pay Check
Many young married couples want to have a family. When there are two pay checks coming in each month, it is relatively easy to pay the bills, save for a deposit to buy real estate, pay off debt such as student loans and even plan retirement. That all changes if you decide to start a family because in many cases, one of the pay checks will suddenly disappear. Even if it does not there is usually the cost of childcare that needs to be put into the budget. Whatever your personal circumstances, you must think about the financial implications of starting a family.
The worst case scenario, from a financial point of view, is that one pay check disappears completely while the vast majority of existing bills still need to be settled and there is the additional cost of a child.
One thing is certain; you will certainly not want any expensive debt when that pay check disappears. The most obvious, and potentially damaging, expensive debt is a credit card balance. Credit card companies charge a high rate of interest on any outstanding balances at the month end. If you have not really worried about such a balance and merely paid the minimum the card companies require, the companies are happy but you shouldn’t be. You are building up core debt and hardly reducing your balance even if you are not spending much on the card each month.
Before you find yourself with just a single pay check you should clear such balances. If you take out a consolidation $5000 personal loans from a top lender for to pay off any expensive debt you will be paying a much lower level of interest and you can put the monthly instalments into your budget so you can see the difference it will make. You can keep your card but use it for convenience and only buy what you know you can settle in full when the monthly statement arrives.
But Have You Got a Budget?
Every business in the world needs to make informed decisions. That can only be done well if they have a plan, a forecast and budget that can monitor their progress and which can be amended as circumstances change. It is no different in family life so you need a budget as a matter of urgency. One paycheck less is certainly a ‘’change of circumstance!’’ A comprehensive budget that reflects all your income and expenditure is the only way to tell whether you are living beyond your means anyway.
There is little doubt if you lose a pay check you will have to economize. That doesn’t automatically mean major sacrifice though your fancy coffee on the way to work may be a casualty? Take coffee with you because it will basically taste the same. You can walk a little more rather than use the car and probably end up healthier as a result, and as an added bonus. You may not be able to spend as much on your social life, drinks with friends and restaurant visits but with a new baby, that will cut itself back.
There are some areas of regular monthly expenditure that you can investigate as well. Many people stick with the same energy supplier for years. It is the same with insurance and telephone. There is no room for sentiment here. There are comparative websites that can help you find out whether you are getting the best deal available. As long as you compare like for like, and read the small print, you may find you can save money on each of these things and they will be significant figures in your monthly expenditure.
There is always a chance of increasing the household’s income other than a full-time job. If the wife is staying at home, there may be income opportunities online which she can do while the baby is asleep. It is usually flex-time and may compensate a little against the loss of a pay check.
The Importance of Agreement
It is impossible to overstate the importance of a couple agreeing about a financial plan and its implications. Everything should be discussed to ensure that your future, and that of your new baby, is secured.
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