Many families would love to have one parent stay at home while the other works. The reason they don’t is that they don’t think they can afford to do it. However, it is possible; you simply need to learn how to live off one income. Easy, no? But possible.
Before my husband I even got married, we talked about children and family. We both agreed that we were willing to make sacrifices so that I could stay at home with them. That meant changing things and living on a single income. We both wanted for one of us to be there to raise them and be a part of their afternoon when they would get home from school.
As soon as we learned we were pregnant with our first daughter, we started to plan for the day she arrived, and I would quit my job and stay at home with her. It took some planning for us to move from two incomes to one. And, while we thought we had everything covered, I’ll admit that we had some rough times.
There were months where we struggled to pay our bills. We had times when we did not have much money to live on after we paid our necessary expenses. However, the one thing we both agree on is that it was worth it. And, if I had the chance to do it over again, I would not change a thing.
If you want to stay home with your child(ren), or if you will no longer have your job, you need to find a way to learn how to live on just one income. It is a scary thought. You may be worried about paying your bills and providing for your family. I get it, as we felt that too.
The thing is, the key to living on one income is to be intentional with your finances, your priority and the way you look at life.
LIVING ON ONE INCOME
You can’t just up and quit your job. It is essential to do some planning and prep work to change to living off one income.
1. Work with your partner or spouse
The first step in moving from two income to one is to make sure your partner is 100% on board. You need to work together and discuss all aspects of the change.
When my husband and I made this change, I remember feeling guilty about spending money. I thought since I was no longer contributing financially, I had no “right” to spend money.
My husband and I had a long talk about my feelings. He reminded me that my contribution was saving money that we would otherwise spend on daycare. He also told me that I am doing the job that meant the most to him in the world – raising our children.
Once I got over my guilt, I was able to spend a little here and there (as we had budgeted) and felt much less guilty about doing so.
Work together and discuss your fears and expectations. You both need to be on the same page if you are going to make a successful transition.
2. Practice living off one income
Before you cut your income — practice! Each month when you both get paid, take the pay from the parent who will eventually quit and put it into savings. Adjust your budget accordingly and try to make it on a single income.
For instance, when I was pregnant with our first, we knew our goal was for me to stay home with our baby. Around seven months before I was due, we started using only 75% of what I made and adjusted our budget accordingly.
After a couple of months, we adjusted our budget and only used 50% of my take-home pay. We continued to use less and less of my paycheck to meet our financial responsibilities. Eventually, our budget worked without my income.
Try to make the slow transition and build up your savings while slowly adjusting your budget and lifestyle.
3. Adjust your budget
If you are going to make less money, then your budget must be adjusted accordingly.
To start, look at your budget and find out which line items you can reduce or eliminate. Perhaps you can have dinner out only two times a month. It may be a good time to consolidate the student loans, change wireless companies or consider dropping cable.
You may also want to check out a service such as Trim. Trim can cancel subscriptions, lower your cable bill and even try to find you insurance that costs less money. The average person saves at least $30 a month! Best of all it’s free to use!
When you make less, you have to spend less. Make sure that your budget works for you on only the income that will continue.
4. Find a way to be content with less
One of the toughest parts of moving from two incomes to one is to be content with less. You may have to drive your older car for a few years longer than you were planning on doing, as is the case with us (read more about that here).
Happiness comes from memories and people and not things. Once you can find contentment in having less, you will feel better. Live with what you need and not what you think others think you should have.
5. Get rid of your debt
While it may not be entirely possible to have all debt paid off before you eliminate one source of income for your household, it is worth doing your best before that happens. We made this mistake.
Our debt was more than $37,000. It was a struggle to cover not only our monthly expenses but also our We had debt – more than $30,000 – when I was no longer working. We struggled to cover the monthly expenses as well as the debt each month. I can’t tell you how many times I had to rob Peter to pay Paul. It was not pretty.
Once my husband and I sat down and agreed to get out from under the debt, we both felt better. It took us 2 1/2 years of a lot of tough work, dedication, and sacrifice, but it was so well worth it. Once we removed the obligation of debts, it eliminated a lot of stress from our lives.
Take the steps to figure out how to get out of debt so you can reduce that financial burden. Even if you can’t eliminate your debt, paying off some of them can have a significant impact on your budget.
7. Become your own boss
You may learn that you can’t live on one income. If you are quitting or losing your job, it may be the perfect time to work for yourself.
Many times, parents who stay home with their children will find a way to bring in a little money (in a way that fits into the family schedule. You can do this in many ways, such as blogging, babysitting, freelancing, or one of the countless other ways to work from home.
8. Continue to save money
When people drop to one income, it seems the savings account always moves onto the back burner. Families often look at the regular expenses and make sure those are paid but don’t forget about savings!
You need to make sure you still build up your emergency savings and that you are continuing to save for retirement (and college if you so desire for your kids). If you don’t have an emergency fund, you will not be prepared when the unexpected happens. Trust me. It will.
All too often people forget savings and then when something happens, and they need money, they end up back in debt (or further into debt).
9. Don’t forget to have fun
All too often, you will get so caught up in not spending that you remember to enjoy yourself. Make sure that your budget includes a FUN MONEY category.
You can use this to buy the handbag you may not need, to take your kids to catch the newest movie at the theater or even to enjoy a date night with your spouse or partner.
HOW TO THRIVE LIVING ON ONE INCOME
Once you are ready to transition to a single income family, it is time to make some changes to the way you live. You need to learn how to live more frugally.
The simplest change you can make is to drop dining out and to eat at home. It requires a bit more prep and planning for it to work. You need to learn the secrets for creating a weekly menu plan and shopping trip. But, the upside is you won’t find yourself rushing out to eat because you don’t have anything planned for dinner.
Cable can be one of the biggest hits to any budget. Rather than shell bit money to the cable company, consider changing the way you watch television. There are countless ways you can still watch your favorite shows and sports programs without your budget taking a hit.
Change how you grocery shop
Many stores offer better deals and lower prices, which can make a significant impact on your grocery budget. Shopping with your shopping list, using store brands and always matching printable coupons with the store deals is a simple way to save big money at the store.
Sell and shop at consignment stores
One place to find affordable clothes for your kids is at consignment stores. You may need to spend a little more time looking through the racks, but it can pay off.
Then, when your child outgrows the clothes, turn around and sell or trade them back! Sometimes, stores will offer store credit in exchange for your lightly used clothing, which is a way to get free clothes for your kids (or even you).
Change your cell phone provider
Using your cell phone as your only phone is very common. That means you can’t drop this bill. However, rather than pay the big companies so much money month after month, you may want to make a change.
There are services such as Mint, where you can get cell service for as little as $15 a month. You bring your own phone, select the plan you want and activate it. A simple change such as this can make a big impact on your monthly budget.
Whether your goal is for one of you to say home with your children or if you are being forced to live on one income, there are things you can do to make ends meet.
For me, there is no greater joy than staying home and being there for my kids. It is worth the sacrifice to make it happen. The best part of all is living a life with no regrets.