Could your family make it on one income?
Have you thought about shifting from a dual-income to a one-income lifestyle? Some common reasons for making the switch include:
- Allowing a parent to stay home and care for children.
- Caring for aging parents or managing other family responsibilities.
- Entering retirement or being laid off.
- Dedicating time to a business.
- Pursuing artistic hobbies or do-it-yourself home projects.
- Volunteering your time where it is needed.
Run the numbers
Whether living on one income is your dream come true or a circumstance you hope to avoid, it helps to be prepared and think through your options. Here are six things to consider:
- Do the math. Track your income and expenses on a monthly basis to determine if one income is enough to support your family.
- Review your health insurance options. Calculate the costs of health insurance if you or your spouse and children had to switch to a different health plan.
- Don't forget life and disability insurance. The work of an at-home spouse (e.g., cooking, cleaning and caring for children) should be considered part of the household income.
- Downsize your debt. Try to pay off existing debts, especially high-interest credit card debt, before moving to one income.
- Size up savings. Try to save six months' worth of living expenses in an emergency fund.
- Ramp up retirement savings. Avoid dipping into retirement savings to make it on one income. Develop a plan to continue saving so both partners are on track for retirement.
Practice makes perfect
Not sure if you can make it on one income? Practice living on one income. Transfer one person's paycheck into an savings account and see how you do living on the other paycheck alone. If you overspend or emergency expenses pop up, consider ways to spend less in other areas to make it work.
Single income budget boosters
Living on one income can be a challenge – and giving up a latte here or there probably won't make up for the loss of a paycheck. The following tips can help single-income families significantly reduce expenses.
- Sell a car if it's not needed, especially if bus and rail transit are easily accessible.
- Downsize to a smaller home or apartment.
- Drop phone, Internet or TV services that are not high priority.
- Plan less expensive vacations.
- Identify your family's biggest spending holes (dinners out, movies, clothes, shoes, adventure gear, salon/spa, etc.). Cut them out or look for cheaper alternatives.
We can help
If you'd like to run numbers or discuss options for living on a single income, visit one of our branches or call us at 1-800-288-3425.
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- Defining and setting goals for a good financial life
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