Taking the Leap to a Single-Income Household
Diligent planning and cooperation between partners can help ease the transition.
Juggling family life and careers is hard enough without having to consider finances. Taking the big leap from a double-income household to a single-income household may seem daunting, but the transition can be smoother through diligent planning and cooperation between both partners.
Choosing to live below your means is very personal. There is no “one size fits all” solution for making the financial transition. But planning and strong communication are key to your family’s success, starting with the following steps:
Single-income success strategy #1:
Begin by talking together about your values – things like security, family, spirituality, and making a difference in the community. Do your financial goals align with the things you care about most? You’ll live a richer life by using your money to fulfill your values.
Single-income success strategy #2:
Work together to create a plan for your money. Save all receipts or jot down all your expenses in a notebook for a month. Don’t forget to add in your little purchases — packs of gum or specialty coffee drinks. Keep your records as accurate as possible. Then, look closely at your fixed expenses and your variable expenses. Find wiggle room as needed.
Single-income success strategy #3:
Make a budget to tell your money where to go. Don’t be afraid to tweak it a bit, but by all means, stick to it.
Single-income success strategy #4:
“Practice” living on one income for a few months before taking the big leap and leaving a job. Your budget will help guide you through this transition.
For example, if you are planning to shift to a single-income household after the birth of a baby, try living on one income before the baby is born. Get used to living more frugally. What to do with the secondary income? Put it away in the bank so that you’ll have a cushion of cash for unexpected events when you make the shift.
Single-income success strategy #5:
Continue making saving a priority, even if you’re living on less. Make sure you’re contributing to an employer’s 401(k) plan, an IRA, and a regular savings account. Consider making your savings contributions by automatic payment, rather than planning to do it at your own discretion. And don’t forget to update the wage earner’s W-4 so that non-earning family members are listed as dependents.
Single-income success strategy #6:
Don’t feel pressure to “keep up with the Joneses.” Recognize that you will have to do without some splurges in order to live your values on one income.
Continue to communicate regularly about money in order to stay on the same page and avoid conflict. Remember, a budget is a working document that might need tweaking. If the blueprint isn’t working, make the effort to fine tune it. Transitioning to a single income will take sacrifices. Keep in mind your values, what is important to you, and why you decided to shift to a single income.