This is a question that was often brought up on Yahoo! Answers before they shut down earlier this year. It is perfectly normal for a spouse to want to stay home with the kids, work on themselves, or delve into their hobbies. However if you have been living a two-income lifestyle for some time, you will find it difficult to adjust to a one income lifestyle. In this post, I will dive into the ways you can prepare for a one income lifestyle.
1. Budget
First, list all of your monthly or weekly expenses in a spreadsheet. For a copy of the Finance Throttle Budgeting Spreadsheet, shop here. Be sure to include all expenses, contributions and sources of income.
First look for ways you can save on fixed expenses. These are your subscriptions, memberships, mortgage or rent, car payments, insurance payments, phone and internet bills, and any other bill that charges you the same amount each month. For example, you can pay as little as $15/month for the Mint Mobile Plan and get $15 free when you sign up here. Mint Mobile uses T-Mobile’s network so it works well with 4G LTE and 5G almost everywhere. I have even used it overseas with no issues. You can also share memberships and subscriptions with family members. Between 5 family members, we share the costs and benefits of Amazon Prime, Netflix, Disney Plus, Hulu, SamsClub and Costco memberships. Shopping around for a cheaper insurance quote really does take just 15 minutes. If you can save $100 on car or home insurance in 15 minutes then you just got paid the equivalent of $400 per hour for your time.
Next you should look at your variable expenses. These include utility, food, transportation, maintenance, home supplies, and other expenses that can vary from day to day. You can lower your utility bills by switching to LED light bulbs, motion sensing light switches, low flow shower heads, and a smart learning thermostat. You can save as much as $70 per month by making coffee at home rather than buying coffee from Starbucks or Dunkin’ Donuts. Purchase your home supplies in bulk, search for more affordable gas stations, and shop groceries from affordable supermarkets like Aldi’s.
After you saved where you could to survive on a single source of income, you need to set a budget and stick to it. The budget should include at least 30% of savings including investing. You should also have a budgetary plan for taxes, vacations, medical costs, maintenance and breakdowns.
2. Pay Off Debt
The next step you should take is to pay off your debt. If you have enough money in your savings account to pay off any of your loans, then pay them off immediately. This will help increase your positive cashflow and fill your savings account back up quickly. Consider refinancing your high interest loans and credit cards or transfer your balances to a low interest Home Equity Line of Credit (HELOC). You can even use a Home Equity Line of Credit as an emergency savings account. Borrow money only if you need it. Having a HELOC frees up your actual savings account to pay off your debt.
3. Save
You may have heard most finance guru’s tell you this. Even Dave Ramsey would teach you to save 6 months of expenses into an emergency savings account. The biggest risk with a single income household is if the head of household loses their job. That leaves the household with no income. If you have a 6 month emergency savings account, you should be able to afford living normally for 6 months as you look for another job. If you spend $3000 per month on your family, your emergency account should have $18,000.
4. Increase Income
I am not talking about asking your boss for money or switching jobs. Although it will help. You should find additional sources of income, especially passive income. You can try driving part time for Door Dash or Uber. Make money mining crypto. Sell apparel online using websites like Zazzle.com. Rent out your garage, shed, parking spot, or an extra room for storage with Neighbor. Consider a temporary or roommate with Airbnb. Or if you are like me, join Bluehost and start blogging with WordPress.
5. Experiment
Going from two incomes to one income is a big charge. It is not a decision you should take lightly. Before deciding to quit, you should experiment. Pretend the second source of income does not exist and put it aside in another account. If you can comfortably live on a single salary for 3, 6, or even 9 months, then you or your partner should feel confident in quitting.
Affiliate Link Notice: This post contains affiliate links, which means I may earn a small commission at no additional cost to you if you decide to purchase or sign up for a product through my referral links. While you can sign up through any other means, it would help support the blog if you sign up through my links. Thanks.
