Living On One Income
For many families, the decision to live on one or two incomes is an arduous and difficult one. Unfortunately, it’s also the kind of decision that seems to draw a lot of censure, irregardless of what decision you actually make. If you should be thinking of moving to one income for your family, here are some tips, drawn from MSN Money, on how to make it work.
Weigh It Up
The working-family versus stay-at-home parent debate is as contentious as they come. And as it has to do with the wellbeing of children, everyone needs to believe that their situation is the absolute bees knees. I don’t have children so I’m just going on what I’ve heard and read but it seems like one of those situations that there are genuinely good arguments for both sides of the coin. The most important thing to do is sit down and work out what set-up is going to work for you best. A thorough understanding of what the consequences of that decision is a must.
The Whole Picture
Leaving the workforce is not just about losing the weekly pay check. Of course, most people appreciate that. But when it comes to making the decision, some factors can fall through the cracks. For instance, what affect will it have on your retirement plans? Will you be able to withstand big unexpected costs, or job loss? What affect will it have on your ability to return to work should it be necessary? Knowing the full picture will help you to stay financially stable for as long as you are one-income.
Planning
From the MSN Money article on this topic, it seems apparent that planning is the make or break when it comes to single income families. Whether you are reverting to one income for a couple of years- say for the first couple of years of a child’s life- or permanently, you will need to plan your finances so you don’t end up in a money hole. The fact of the matter is that your finances will be less extensive than people with two incomes in their family- unless of course, you marry a Rockefeller. You’ve made the decision that you think the benefits outweigh the financial effects. Now is the time to plan to soften those effects. For instance- can you clear all your non-mortgage debt before you become a one-income family? If you can get yourself debt-free, your long-term financial health will boom.
Trial Run
While you’re still on two incomes, try living off one cheque for a while. Not only will it bolster your savings, having one income go straight to the bank, it’ll also show you whether or not this decision is a viable one. You’ll learn all the necessary frugalities, while having an emergency fund to back you up through the teething problems. If you can’t live off the one income, you’ll need to rethink your decision, maybe waiting until your partner gets a pay rise, or think about part-time options for yourself. If you learn to live on the one income, keep the money saved from the trial run in case of big emergency.
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