How to go From Two Incomes to One!

two incomes to one, single income
How to go from two incomes to one

 

I remember the day my wife told me she wanted to quit her job and become a stay at home puppy mama. I was mortified because I enjoyed having the extra income she brought in.

It wouldn’t be impossible for her to be a stay at home wife, but things would get tighter. At the time, she brought in a decent income, and it was nice seeing the extra income going towards our home mortgage.

For myself, the biggest hurdle was the thought of losing the income that could potentially put us in a better situation. My wife was all for it (wonder why?), I just had to convince myself it was the right move.

In the end, I agreed that it would be a good move because it would reduce the amount of stress my wife experienced on a daily basis, and trust me, it’s always good to reduce your wife’s stress!

It also ended up being an excellent move for the household. I go to work and come home to a spectacular wife who’s paid the bills, cleaned the house, cooked dinner, dealt with running errands, and anything else we would have been too exhausted to handle after a full days work.

The thought of living on one income can be a scary thought, but it has its perks. It’s going to take extreme diligence by everyone in the family to stick within your financial means, especially if you are used to living on both incomes.

If you are thinking of making (or forced into) this drastic change, consider these tips!

Are you looking to become a stay at home mom or dad? Going from two incomes to one can be scary, but there are benefits! This article is all about preparing you for the change. Let's talk about getting your budget in order, saving money on a single income, and continuing to save for retirement. It's a big change!
How to go from two incomes to one

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How to go from two incomes to one!

Budget

Budgeting is the heart and sole of family finances when living on a double income. It’s even more important to plan effectively when you’re on a single income.

It’s time to take a look at what your budget would be like on an individual income. Write down all of your monthly expenses and ensure that you can still afford your house or apartment, utilities, insurance, fuel, food, and other expenses.

You are probably going to have to cut the non-essentials to make your new budget work. That might mean giving up ice-cream, lowering how much you can freely spend, having your spouse cut your hair, abandon the gym membership, and finding other luxuries to give up.

Do not give up your ability to save money each month! You still need to have money in your retirement fund and put away money for emergencies. You should consider taking our free course on budgeting and saving money

Build an Emergency Fund

Having a fully funded emergency fund is essential for reducing down to one income. An emergency fund is there to catch life’s little mishaps, and it’s easier to build and maintain on two incomes.

You should plan 6-12 months of expenses for your emergency fund. It’s only a matter of time before something expensive impacts your family. You don’t want your only working spouse to lose their job and not have an emergency fund!

I would recommend placing your emergency fund in a money market account, which you can get through your bank. A money market is like a savings account, but you earn a higher interest rate.

Do not place your emergency fund into an investment that has the potential to lose money or is hard to access when you need it.

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Trial Run

So now that you’ve created a budget and established an emergency fund, can you reasonably live on it? Before you make the switch to a single income, I recommend giving your budget a trial run so you can make adjustments as needed.

My wife and I did a trial run and had to make a few changes. We had to become more disciplined about our shopping habits, and it took a few months for us to nail it down. We tended to spend a lot on grocery shopping so learning the art of frugal and/or batch cooking was a definite plus!

The best part about the trial run is that you are now living on one income while your other spouse continues to work. Now you have the ability to shuffle their earnings into retirement, emergency fund, and your child’s college fund.

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Pay Off Debt

It will be tough to live off one income while you have a significant amount of debt to pay off. I would highly recommend paying off as much if not all of your debt before you make the switch.

I suggest putting your credit cards away (or shredding them) and learning to pay with cash. Studies have shown that you tend to spend less money when you pay with cash.

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Consider Switching Jobs

Have your working spouse look into the possibility of finding a new job. When you swap jobs, it often comes with a pay raise as a new employer presents you with an offer to entice you to work for their company.

The pay raise isn’t the only benefit to swapping jobs. Often you might be able to find a company with better benefits such as health insurance or 401k matching which might have been unavailable in your previous jobs.

 

Are you still looking for more ways to save money? Consider joining us for our free course on budgeting and saving money. The course is full of money tips to help you and your family make the jump from two incomes to one.

Do you live off of one income? Are you still one the fence about making the switch? Post your family’s best tip for living on one income in the comments below.