5 Tips to Adjust from Two Incomes to One Income with Resources from Bennett Lending

Most couples and families today operate as 2-income households with the two heads of household working jobs outside of the home or running businesses. While 2-income families seem to be the norm for many--there are still many families living quite efficiently on single incomes. Choosing to transition from two incomes to one income is a significant financial decision. While the reasons behind the choice to live on a single income as family vary--many of the challenges of living on a single income, especially for families who had previously enjoyed two incomes, are present in most households. My husband and I made the transition from a two-income household to a single income nearly 16 years ago. Today, I wanted to share some tips to help you adjust from living on two-incomes to one salary and provide tips for using resources like Bennett Lending as well.

Weigh the Pros and Cons of Living on One Income in Monetary Terms.

Most families who choose to live on a single income do so for one partner to stay home to raise a family or become a caregiver to an ailing parent or family member. Sit down as a family and be very serious and honest about reasons you are considering this change and the benefits you expect to receive once the transition is made. Don’t forget to consider the risks and all of the lifestyle changes that this transition will likely create as well!

When my husband and I considered my leaving the workforce--we had a few reasons for the decision--but, primarily, we decided that we wanted one of us to be the primary caregiver for our daughters. We had a 9-year old at that time who was having difficulty in many areas of school, and I had just given birth to our second daughter--who had some health issues that would necessitate “special needs” childcare. My family’s pros and cons list looked something like this:

Pros:

• More time to help with homework and learning activities
• Time to be involved with more school activities during the week
• More involved in the baby’s day to day healthcare and personal development
• Less stress/worrying about childcare or about who would take a day or time off work to accommodate a sick child or health care appointments
• Home would be better managed with better organization, healthier meals, etc.

Cons:

• Would we have enough money to cover all of our living expenses every month?
• Less money for extras like vacations, clothes, entertainment, etc.
• Extracurricular activities would likely be limited due to cost.
• There would be emotional/personal aspects of leaving a career.
• Could we save for college funds and retirement funds?
• Could we budget for unexpected expenses like a new furnace or expensive car repairs?

It should be no surprise that most of our cons concerned money! It was essential for us to look at the benefits in terms of their monetary value as well. For us--we merely researched the prices that we would pay for someone else to provide services such as tutoring, health care support, household management, and childcare for our family. We quickly realized that the costs of tutoring, after-school childcare and full-time special needs daycare for an infant--plus support in “running our home” the way we felt we should would nearly cancel my “take home” earnings.

Get a Very Honest Picture of your Household Spending!

Once the benefits of becoming a single income family interest you--it is time to get down to the real work of transitioning from a two-income family to a one-income household. Before you can decide where you need to go--you need to have a detailed, exact picture of where you are!

Spend a full month tracking every single expense from parking meters and lunches out to loan payments, gas for the car and all of the household utilities. Once you have tracked all of the expenses in a given month--log other random-but-necessary bills that will pop up throughout the year (car insurance, life insurance policies, regular school fees, one-time subscription services, retirement fund and/or college fund contributions, etc.)

How much do you spend in a given week? Throughout a year? How does that compare to the single salary you are seeking to use?

Decide Where You Can (and Will) Make Spending Cuts.

You probably made a huge list of expenses in the last step. If you are lucky (and rare), your current expenses fall within the single income you seek to use. More than likely--you need to make some spending cuts. Probably a lot of spending cuts. Surprisingly, almost every expense you have can be cut down a bit if you are willing to make some changes--and, sometimes, some sacrifices. Once you know what you are spending--it is time to call utility and service providers, etc.--and ask for better rates, or more affordable plans, or help in cutting the unnecessary add-on options. Compare prices with other providers, cancel subscription services that you don’t really use and take a hard look at all of the services you have. Even if you opt to stick with two-incomes--you may save a lot of money just making some small changes or canceling unnecessary services!

Seek Advice from Professionals Like Bennett Lending.

Before fully committing to transitioning to a single family income--you should seek as much professional advice as you can!

• Tax Advisors

• Attornies

• Insurance Agent(s)

• Lenders like Bennett Lending

• Financial Advisors

• Employer’s Human Resource Department

Talk with your tax advisor, understand your credit scores and correct errors on your credit reports, talk with lenders about financing and refinancing options to lower monthly payment obligations, discuss your plans and goals with a financial advisor, create a plan to pay off debt or create a savings plan, Remember to discuss health insurance and changes to employee benefits with your company’s human resource department. Every family and every situation is a little different--and you may have options available to you that you may not know without meeting with the professionals! 

Give Single Income Living a Test Drive.

Once you have set up a single income budget and made as many changes as possible that you are willing to make--see if you can actually live on a single income for a month or so. If the budget requires brown-bag lunches--pack those lunches during your trial period. If the new budget needs canceling housekeeping services or landscapers--add those tasks to your DIY list during the weeks as well. Trying out single income living for a couple of months lets you see how you, your budget and your family will respond to some of the proposed changes. This test is really your best chance to make sure that everyone is on board with this decision! If there are too many objections or issues during this trial period--you may need to re-think your plans.

Transitioning to a single family income from two salaries is not easy. For many, it will be a lifestyle change. You will be faced with daily wants vs. needs considerations, increased do-it-yourself projects and a lot more focus as you weigh each and every expense from your limited resources. Having said that--my family certainly found that the benefits outweighed our sacrifices and efforts over the years!