No, we are not kidding! It is possible to pare down to one income, even in today’s economy. The fact is, more couples are relying on two incomes than ever to meet their monthly financial obligations. Statistics reveal that nearly 79% of married couples today find both husband and wife holding down a job. This has increased from 66% back in 1977. However, even in the face of that fact, there is still the possibility to get by on one income.
As is often the case, life events pop up from time to time. For example, you may have finally decided to start that family, decided to go back to school for some further education or are even facing a layoff. If these or other situations suddenly happen, it can potentially force you and your partner to confront the very real possibility of going from a two to a one paycheck family.
Even though the odds are firmly stacked against you, essentially cutting your family income in half is not as scary as it may seem. In fact, with thorough planning and a willingness to make cuts where necessary, it is definitely doable. That being said, let’s take a closer look at some ideas that can get you on your way to becoming a one income family.
Make Sure You And Your Partner Are On The Same Page
The number one goal here is to be open, frank and honest as to what each of you think about the idea of paring down to one income. Communication throughout the process is key when making a decision of this magnitude. It is crucial that you both fully understand the ramifications of your decision and agree ahead of time that this is something you both agreed on. Even when attempting to anticipate all the possible scenarios that can come from a decision such as this, there is bound to be something popping up after the fact. The one thing you don’t want to do at this point is place any blame on your partner. It’s not about vanity, it’s all about understanding.
One area in particular to address is who will be handling the money that is now earned by one member of the household. Before this, you both had a say as to what to do with the money, even though it was placed in a neutral pot of sorts. Once one of you quits their job and stays home, it can be somewhat like losing voting privileges because it isn’t technically your money. A good idea is to anticipate this fact and establish some monetary ground rules beforehand. A suggestion could include agreeing on a portion of the money going to the one staying home as a personal allowance, giving them the freedom to spend that money any way they choose.
However, you decide to approach this, make sure to agree that the wage earner will not hold that distinction over the head of the one who agreed to give up their job.
Mapping Out Your Budget
As can often be the case when there are two incomes, a budget is pretty low on the list of priorities. However, if you are thinking that now would be a good time to pare down to one income in order to pursue other interests such as those listed above, establishing a budget needs to move to the top of the ‘to-do’ list, also for occasions such as Valentine’s Day.
This doesn’t mean you will be eating soups and ramen-noodle dinners from here on out! With some careful planning and a closer look at your food spending habits, you just might be surprised at how well you can still eat on one income. Cutting down on the number of times each week you eat out or eliminating most of those heat and eat meals and instead buying foods that require preparation at home that doesn’t always involve a microwave oven can result in huge savings on the food budget. In addition, for the one still going to work each day, consider taking a lunch with you instead of heading for the nearest vending machine or fast food outlet during your lunchtime.
Other areas to take a closer look at include cable or satellite service, cell phones, monthly subscriptions and weekend entertainment excursions to the local theater. There are numerous ways to stretch those remaining dollars, even in a tight economy. Make your weighing out cutting down to one income idea an adventure. It can be a real eye-opener as to where much of that second income has been going once you genuinely sit down together and crunch the numbers. This is actually also another reason NOT to go to the gym today. Or tomorrow…
One last thing to keep in mind when budgeting is the insurance payments. As critical as these are, it is possible you can cut some fat in this area as well. Schedule a time to talk to your insurance agent, letting them know what you are considering. There is the chance they may have some ideas to save you some money on your current insurance needs. Either way, you need to still make those insurance payments each month, even after going down to one income.
Trimming Those Big Ticket Items
Fact is, when it comes to things like forsaking a few lattes in order to make the finances go farther not being a bad idea, it isn’t likely to make much of a difference. Some truly heavy hitters to consider could include selling one vehicle. After all, one of you is now staying home and, if you are serious about going to one income for genuine reasons, this can be a great place to start. Not only are you eliminating the repair and upkeep costs associated with a vehicle, you are likely making monthly payments as well. Even if your vehicle is paid for, there are still the monthly insurance payments required. All of this can add up to quite a bit of extra money each and every month that often require that second job, to begin with.
One other major big leaguer to consider is your home. Even in a depressed housing market, if you have the advantage of still seeing equity in your home, you could be in an enviable position. If you can sell your home for a profit and then turn around and purchase a smaller, less expensive home, you can reduce your monthly payments. In addition, with interest rates at historically low levels, you could realize several hundred dollars more each month that your second paycheck had been covering without creating any ripples in the water.
If this is not feasible, at least consider refinancing at a lower rate. This alone could lower your payment to free up additional cash to cover expenses incurred after quitting one job.
No More Keeping Up With The Joneses
So many households today don’t often stop to consider that a large chunk of their income is going places not necessary. It is a fact that many unwittingly put themselves in the category of keeping up with the trends today’s society has to offer. We can easily find ourselves spending money just for the sake of spending it! Impulse buying is an art form catered to by the stores today and we far too easily comply. If you are considering cutting your income in half, you might be surprised at how much you can do without in this consumer/consumption world we live in.
Bottom line: you’ll have to come to grips with the fact that you can no longer have your cake and eat it too! You will have to be brutally honest when faced with those times when friends and family want to meet you at a restaurant or suggest a weekend get-away by letting them know you simply can’t afford it. You also need to tell them why so they will be more cognizant in the future when inviting you to spend money you no longer have. Be honest with yourself and others why you are doing this and then stick to it.
Don’t Cut Back too Much
One thing to keep in mind when cutting back to one income is not to short-change your long-term savings plan. Just because you have another twenty years or more before retirement stares you in the face is no reason to stop planning for retirement, because it will come.
It is also vital to not cut too much fat out in order to squeeze every cent you can in order to justify what you have done. There are going to be times when it is okay to have that latte or to occasionally go to a movie. You will also need to have some downtime by way of a vacation and you need to plan for that financial situation within your budget. If you don’t, it is possible that the blame game could rear its ugly head should these situations arrive unplanned for.
Give it a Test Run
Before handing in your resignation, live for a while as if you only had one income. Take every cent of the second income and put it in a special savings account and do not touch it. This way you can get a real feel without sacrificing that second job. There is no better way to know for sure than to establish a budget that is solely based on one income and then stick to it for a season. If after say six months you find that it isn’t such a great idea after all, you can postpone your other plans for a while longer and take all that money you have been saving to pay down debt. If nothing else, you will have a goodly amount of money set aside to then take a special vacation or to use to invest for your retirement.
In conclusion, only you will know if this is a good way to go for your family. However, in a day full of instant gratification temptations, along with the powerful influence the advertising agencies place upon us to spend and consume as if there were no tomorrow, delayed gratification is becoming a lost art. If this is something you would like to recapture, becoming a one-income family is an incredible way to break with tradition and discover what life is really all about.
If nothing else, the life lessons you will learn during a trial period will have made the test worth it and possibly opened your eyes in ways you would have never imagined when it comes to why you both work to begin with. After all, holding a job and earning a paycheck isn’t the only way of seeking and then finding self-worth in this world.