Last week I read a post over at Debt Free Adventure about how it’s a good idea to start living on one income, whether or not you need to. If you’re married and have no kids, it can be a good exercise to see what it may be like if you end up having children and one partner needs (or wants) to stay home with the child. It is also a good way to get ahead faster because you’re living below your means, before you have to! So today I want to talk about living on less before you need to, and why it’s a good idea.
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Why We’ll Be Living On One Income Soon
Part of the reason that I’m writing about this topic is because my wife and I are currently being thrust into a situation where my wife will no longer be working. We’ll be living on one income.
No, we’re not being faced with layoffs or a bad work situation. The reason we’re going to be living on one income is that we have agreed that my wife will take on the important job of being a stay at home mom. Maria is currently pregnant with our first child, our son Carter, and we’re expecting him to be born sometime at the end of June. We’ve had plenty of time to plan for this situation, not only because the pregnancy lasts for 9 months, but because we’ve just been looking forward to this day for some time.
Yesterday my wife gave her two week notice at her job, and so now our life living on one income is two weeks away from reality. It’s a bit scary, but we’re ready.
The Switch To Living On One Income
We made our switch to living on one income a couple of years ago, not because we were planning to have children, but more just because we were scaling back and working our way through Dave Ramsey‘s Financial Peace University. We were attempting to pay off our non-mortgage debts, and it made sense to live off of my income, and use the rest to pay off our debts. It worked out really well and we had quickly paid off my last student loan, and the remaining balance on my car.
After our debts were paid off, it just made sense for us to continue living off of one income (much less than one income actually), and save my wife’s income for retirement, emergency savings, and to save and pay cash for our next car. It’s amazing how fast you can save money when you’re living on a lot less than you make.
Now that we are expecting our first child, and are anticipating all the expenses that come with having a child, we’re extremely glad that we started living with less long before we needed to. We’ve planned ahead and saved up a substantial 9 month emergency fund (in case of layoffs or other issues) and saved up and paid cash for all of the big baby items (furniture, clothes, car seat/etc). Now we’re building a little bit of extra cushion into our budget for unplanned baby expenses as they crop up.
Because we planned ahead and updated our budget, we should be ready when the day we need to live on one income comes. (It’s only 2 weeks away now!)
Some things you can do in preparation for living on one income:
- Do a budget
- Save up a small emergency fund.
- Pay off all debts with intensity
- Continue saving an even larger emergency fund.
- Save up cash for expected expenses (like cars, taxes, etc)
- Plan for as many scenarios as you can envision. Plan ahead!
Benefits Of Living On One Income
There are quite a few benefits to living on one income, and living on less than you make – before you need to. Among them:
- If you’re in debt, you can pay off debt faster.
- Once debt is gone you’ll have less stress because you’ll have a surplus.
- If one of you loses a job, you’ll be able to absorb the loss easier since you’re living on one income anyway. (unless the job remaining isn’t enough to live on)
- You can save money a lot faster.
- Retirement funds can add up quicker.
- Financial peace knowing that you’re living below your means.
There are also benefits to sacrificing to live on one income when you have children. Some of the benefits include:
- No daycare costs because one parent can stay home.
- Healthier kids because of no daycare germ incubator!
- You’re able to devote yourself better to nurturing and raising the child.
- Stay at home spouse can keep the home, which leads to less stressful evenings figuring out who is going to cook, when to clean the house, etc.
Those are just a few of the benefits that I came up with off the top of my head. I’d love to hear your thoughts as well, however – both positive and negative!
Sacrifices May Need To Be Made
If you’re currently living on both incomes, and the thought of living on just one of them sounds impossible, it may be time to start thinking about ways you can cut back.
Can you move into a smaller house with a more affordable mortgage? Are there ways you can accelerate paying off your debts to reduce your debt obligations? Are you living a lifestyle that’s above your pay grade?
Examine how you’re living and figure out why you need both incomes currently. Once you figure it out, try finding things that you can change in order to facilitate a move towards a “living on one income household”. We found that it was key in creating a sense of financial peace in our household, and we believe it will work for yours as well.
What do you think about living on one income in a dual income household? Is it something you are trying to do? What do you think about sacrificing one of the incomes in order to be a stay at home parent? Tell us your thoughts, we want to know!
Yeah, getting the debt paid off *before* switching to a single income is an excellent idea.. ;)
Say hi to Carter.. ;)
Heh.. yeah it certainly makes things easier.
Say hi to my Godson for me – and thank him for the card he “sent me”. :)
I completely agree. We’ve done the same thing, living on just my income from the beginning of our marriage. My wife plans to stay home with the kids when that day comes, so we thought it would be good to prepare. Living on one income has made it much easier to pay off her college loans, and it is much less stressful, as losing a job wouldn’t effect our budget.
Derek Clark´s last post ..Nashville Flood, How You Can Help
I agree. It makes it easier if you just do it from day 1, the adjustment is much easier then – because there is NO adjustment. :)
Peter,
Congratulations, first of all.
Secondly, I believe that living on one peson’s income is a fantastic lifestyle for a two income household.
My wife and I do this now and (ideally) by the time our children are in school, our mortgage will be paid off and we can both move to working part-time. With no mortgage payment and both of us working part-time, we will easily be able to maintain our current lifestyle. This will also allow us both to balance work/home life and diversify our household income stream.
Congratulations again and have a fantastic day.
Tyler
Peter´s last post ..Putting Out The Greece Fire!
I can’t wait for all your adventures with Carter you are going to give me some insight into what I am getting into! My Wife is about 9 weeks.
She works from home, so we are going to be doing the one income – modified and hopefully she can keep her larger accounts (she is in paper sales).
Good luck buddy
Evan´s last post ..What are Deferred Annuities? Fixed vs. Variable Deferred Annuities
Living on one income is an excellent way to get rid of debt, create an emergency fund, and build savings-congratulations on staying focused and the new addition!
Pete, I love the idea. Matt’s post fired me up and so did yours. We’ve been on one income for over a year now. Prior to that though, we basically “lived” off of one income. We did all our saving and debt reduction with that extra money. Now we can truly live on one income and not feel the pressures. I hope it works out good for you guys. I’m sure it will.
PT´s last post ..How to Fight the Urge to Spend When You’re Trying to Save
When I saw the picture in this post I thought I missed an announcement that Carter came early! Shew… who is that baby?
Anyway, you and Maria have done such a great job preparing your home for the addition of a little one. God will bless your sound stewardship efforts and it will pay off big time down the road.
I also LOVE what Tyler said about both parents working part-time… that is great. It will allow both parents to be involved and allow both to have necessary break every now & then.
Matt Jabs´s last post ..Car Repairs – Scrap it, Park it, or Fix it?
Haha.. no, that baby is my nephew actually, and that guy is my little brother.
When our first child was born, I continued to work because between my parents (who live next door) and my husband, we were able to avoid day care costs. I loved my job and we wanted to have another child, but weren’t sure if I wanted to continue to work. I told friends that I would probably go back to work after #2, but if we had 3 kids, I would stay home.
So when I got pregnant the second time, it was with TWINS! I think God was trying to send me a message!
We were already debt-free except for the house at the time we found out about the twins… so I worked as long as I could and we banked every penny of my income we could (minus a few things for the extra baby!)
Staying at home was the best decision we’ve made! Sure, we miss the second income, but now that my blog is growing, I’m able to bring in a little extra cash from home while taking care of my three boys. I feel so blessed that I get to be with my boys AND do something I love that is separate from being a mom!
It sounds like you and your wife on our a great path to much happiness!
Wishing you many blessings!
Um.. Shouldn’t your wife have waited until after her maternity leave was up? That way, she could have gotten paid during her absence.
Or do they have to pay that even if you quit before the leave begins?
Abigail´s last post ..Gleeful about Glee
She works at a church and they don’t have paid maternity leave. :)
Living on one income can be done…
It’s not easy, but it can be done.
An understanding of what it means by you and your spouse is the key.
Spending must be scrutinized at every level.
Note I didn’t say eliminated, but merely scrutinized.
Sounds like an excellent plan Pete! Best of luck in your new born. Living on one income and banking the rest is an admirable practice.
Your wife can be your blog’s COO when ur at work!
I’ve read a number of your postings and enjoyed them all. This one is particularly interesting because the chant I hear from other young couples is that it now takes two incomes to live. Glad you are accepting the challenge to do something unusual and I know you can be successful. Your wife will have plenty to do anyway. Proverbs 31. Have to considered cloth diapers? I mention this because I have seen so many who claim they are financially tight yet don’t consider the alternatives to one of the major baby expenses. Yes, it’s a little messy but not only is the idea economically sound but it will save our environment. God bless.
I also wanted to mention a money saving tip (it may be obvious). It is for a mom to breatfeed her baby. So much money is saved by not needing to buy formula. It also has many health benefits to baby and mommy. Also, it helped me lose the extra weight gain from pregnancy.
My wife is breastfeeding, and it is a big money saver – formula is hugely expensive!
We live on one income and I wrote a book about others who live on one income and manage fine. There’s even room for extras becuase we save for those extras!
Wow…wish I had read this post three years ago. I am currently a stay-at-home mom. However, we did not practice living on one income. It is a big adjustment, but my husband and I knew that it was becoming too stressful for me to continue working as a teacher and making sure that I was fully participating in my children’s lives. I don’t regret it one bit because I get to really know my children and husband. Plus, life is much more happier. Less money, but much happier.
Aww congrats on your son!!! And congrats on being able to have your wife stay home!! That’s awesome :)
We started living off of one income when we found out I was pregnant. We saved all of my money and used it for a down payment on a house. Since then, my husband has paid all the bills and living expenses (for the most part) and I stay home with our two little girls and freelance write. My money is for savings! I love this system because I’m still able to contribute but there’s no pressure on making money since my main “job” is being a mom to our girls!
Great post, thanks for sharing!