What happens when your household goes from two incomes to one? This could be because you are having children, taking time off to study, dealing with medical issues or you've been retrenched.
There are two ways this occurs: either it's planned or it's the result of unforeseen circumstances.
Let's first look at the reduced income we can plan for.
Planned income reduction is a budgeting exercise, so start by understanding your current budget. In any budget, there should be a small amount banked each week, so you have some savings. Every household needs something tucked away.
Once you write your new budget, expenditure must be less than your revised income. So you have to cut costs.
When reducing your spending, start by dividing it into fixed and discretionary. Fixed costs include food, power, housing and. for most households, vehicle.
Fixed costs doesn't mean fixed expenditure: you can reduce a mortgage payment by moving to an interest-only loan. This generally isn't a good long-term solution but can free up cash if you're strapped for a time. If you're confused, see a mortgage broker.
Food costs can be reduced by shopping at a cut-price supermarket and by putting only basics in the weekly shopping.
Do you need a fancy car with the big lease payment? This might be a time when you need to make more moderate decisions.
And tweak your utilities bills: find a better plan for power, gas and phone.
Your discretionary spending is where you make big savings. The coffees and lunches at work, the dinners out and leisure costs such as cable TV and streaming services. Also, look at what you're paying to have the latest smartphone.
Many households can make this work with some sacrifices.
There are also times households move from two to one income in unforseen circumstances. It could involve sudden job loss, and in this case there will have to be a quick change of budget and a concerted effort to find more work.
Or it could be the result of illness or injury that stops you generating income.
The answer? Just as you have insurance for your house, contents and car, you need to cover the loss of your income.
You can do this with income protection insurance. This covers you if you are unable to work and will help cover the bills. It gives you the freedom to recover and get treatment without having to worry about regular expenses. Most policies will cover 75 per cent of your income if you are totally or partially disabled. Certainly, not something many of us like to think about but your income is one of the most important assets to protect as it funds everything else.
There are also other forms of life insurance that will help you and your family cover your debts if you suffer a trauma (such as a heart attack), or become totally and permanently disabled. If you have appropriate cover then your insurance pays out the agreed amount for the mortgage, credit cards and car finance, allowing your partner to run the household.
Because unforseen circumstances are usually the serious ones, it's worth getting expert advice on life insurance so the policies you rely on are right for you personally.
In the end, dealing with reduced income is a budgeting exercise and costs will have to be reduced. And don't hide from unforseen dramas. Just because we don't know what lies around the corner, doesn't mean we can't plan for its impact.
Mark Bouris is executive chairman of wealth management company Yellow Brick Road.