Living On One Income- Tips for Going From Two Incomes to One

by RC on November 11, 2009

Living on one income can be a scary thought, particularly if it not something you choose to do but is forced upon you due to the loss of a job or other life event. Even if it is totally planned, it can be a daunting thought that a portion of your household income (even if it is not a large portion) will soon not be coming in to help pay the bills.

I know a thing or two about living on one income, as my wife and I have been a one income family for a little over 4 years now and my wife has been a stay at home mom (a very hardworking SAHM, I might add) since that time.

My wife didn’t get fired or laid off, but the circumstances at the time led us to make the choice that she would stay home with our young son, and we were ready for another child as well. The event that led us to make that decision was Hurricane Katrina, as our childcare provider’s house got flooded, and it was a difficult time for trying to find another daycare or sitter with all of the flooding and damage in the area. So we decided my wife would stay at home with our son, and we would start trying to expand our family.

While things have not always gone perfectly, I have managed to learn a few things which seem to make going from two breadwinners to a sole supporter financially a little easier:

Prepare financially, if possible- While you may not always be able to plan things out exactly how you want them to happen- I know we certainly weren’t planning on taking the plunge from 2 incomes to 1 before Hurricane Katrina hit the New Orleans area- if at all possible, take care of any debt, especially credit card debt, and build a healthy emergency fund if possible.

Maintain healthy communication- When you have a significant lifestyle change, such as going from two incomes to one, it is essential to communicate with your husband or wife. No one can read minds, so it is important to discuss you expectations, fears, and other thoughts with your husband or wife to make sure you are on the same page if possible, or at least know where the other person is coming from. This is extremely important if one person has lost their job, as they may be quite upset about it, and may be feeling upset or depressed about it. Not communicating to them can make things even worse.

Manage Expectations- Don’t expect that things will go flawlessly with your finances when your income is reduced. Roadblocks and unexpected financial situations can arise, but if you expect them and prepare for them it can make the transition easier.

Cut back on your spending- even if you feel like you can make do living the same way on one income, cutting back can allow you to save a little more for anything unexpected. Some things that you used to have to pay someone else to do you may be able to do yourself.

Pay extra attention to your finances, especially at the beginning- When making a big change, it is better to err on the side of caution when it comes to the amount of time you spend managing your money and how much you pay attention to your finances. Once you get comfortable with your new income amount, you can get back to your normal routine.

One interesting thing about living on one income vs. being a dual income family is that you may actually not be in such a bad position should you need additional income. The stay at home spouse can pitch in where necessary, working occasionally, part time, or even going back to work full time should the situation warrant it. In a dual income household with two people working full time already, it can be a difficult thing to do something similar as working in addition to a full time job is quite difficult to do.

Do any of you support your family on one income? What tips do you have for someone going from a dual income to a single income?

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{ 15 comments… read them below or add one }

traineeinvestor November 12, 2009 at 12:53 am

Thank you. This is very useful.

We will be making the change from a two income household to a one income household in a few weeks when my wife quits her job to become a SAHM. While we are on the same page in terms of the need to do this (our oldest child started school in August), we still need to spend some time sorting out the financial implications.

The two biggest issues for us are (i) my wife is uncomfortable with not being financially independent and (ii) I will have to defer my planned retirement – but we are not sure by how much.

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RC November 12, 2009 at 7:22 am

@trainee- Glad that this will be help. I understand your wife being uncomfortable- it can be difficult for someone, I imagine, who feels they are supporting themselves financially, even if it is in a relationship or marriage, to give that up and depend financially on the other.

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ashley November 12, 2009 at 2:21 pm

I was living on one income for years -as a single mom. I have never gotten any support at all from his father, but I always managed to raise my son myself on a single income without assistance. I’ve always kept my expenses low and have had to “do without” things others call “needs” but I considered luxuries!
I’ve remarried and we choose to “live” on my income and bank his. It’s a great habit to get into and I recommend it to all couples.

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RC November 13, 2009 at 7:15 pm

@ashley- Sounds like you have “mastered” living on one income ! Continuing to do so now is a great idea, in my opinion.

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Dan November 13, 2009 at 4:07 pm

The most important thing about living on one income is to structure your expenses so you can do it before hand. The 2 biggest expenses for most are a house and car(s). Simply buy a house that you can afford on one income, and purchase cars that you can pay for on one income.

In this way, you can bank the extra income, and even if you don’t bank 100% of it but spend a little (such as on work clothes, eating out more often, etc.) when you do fall back to 1 income, you can accomodate it.

My wife and I have been living on just my income for about 5 years now, and the only reason we are able to do it successfully is that we structured our lives before hand so we could acheive it. No matter how much you save before hand, you cannot manage it if you buy too much house!

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RC November 13, 2009 at 9:15 pm

@ Dan- Good point about getting control of your expenses beforehand, if possible. You are spot on about the housing and car costs- those two can be a big problem if you run into income or cash flow problems.

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GHolmes November 13, 2009 at 7:51 pm

Been almost 2 years now that wife has stayed home with birth of the child. Communication and we had a luxury of prior planning that allowed for a smooth transition. It gives me peace knowing that she is with him and not having to put in daycare. As opportunities come up for her we can bank her earnings as @ashley does in their household.

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RC November 13, 2009 at 9:18 pm

@GHolmes- Sounds like things are going well. I agree, it was a great feeling to know my kids were with my wife instead of in daycare.

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Financial Samurai November 14, 2009 at 10:10 am

Thanks for this post. It’s very helpful for those even with two incomes, as it helps try and budget our lives as well.

I may very well see if we can just save my wife’s salary all next year, to expedite our early retirement goals.

Thanks for sharing and hope to see you around FS one day.

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RC November 15, 2009 at 10:44 am

FS- Thanks! Sounds like a great idea to try and save one salary to expedite your retirement goals.
You have a great site- I’ll be around!

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FFB November 14, 2009 at 7:24 pm

We’ve been on one income for quite a while now. One thing you can do is start to live you you are on one income as son as possible and bank the difference. Also cut your expenses as much as possible. Then once you are making it you can add things back if you like. You may find that you were ok without some of the luxuries you thought were necessary!

Great article!

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RC November 15, 2009 at 10:47 am

@FFB- Good points- you can always add things back to your budget once you get used to living on one income.

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scheng1 November 15, 2009 at 8:26 am

My parents’ generation is mostly a one-income generation, then the government starts to emphasize double-income. I’m not even sure that is a good thing. People tend to become more materialistics, and families break up more often.

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mydealcracker November 15, 2009 at 12:32 pm

I commend all those who can live on one income. I have done it for years because so far I have not found a second, but I am trying desperately to find that second source. Sorry to go against the popular opinion here but one source of income is no fun and too much worries.

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5 Girls Ditching Debt November 29, 2009 at 10:54 am

This was a great post for one of our co-workers who just lost her husband. Perfect timing, thank you.

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