Wednesday, February 2, 2011

10 Concrete Tips for Being a One Income Family

I came across this article about how to become a one income family. In the comments, many people asked for specific tips about living on one income. Since the hubby and I have been a one income family for exactly one month and two days, I can provide a few tips about how we got to this point:
  1. Before you cut back to being a one income family, you need to be out of debt. Leaving the sole wage-earner with the responsibility of rent/mortgage and regular living expenses plus tens of thousands of debt is simply not fair. So before cutting down to one income, if you have debt, both people need to work four jobs if necessary to pay off debt as quickly as possible.
  2. You need an emergency fund. Everyone needs an emergency fund but it is extra important if there is only one wage-earner in the family. What if the wage-earner gets injured and can't work? What if the family is socked with a huge one-time expense? Besides these problems, should the family decide that the second adult needs to go back to work because finances aren't working out as expected, at least with an emergency fund, the family will have a little cushion while the non wage-earner gets back into the world of work.
  3. You will need to stop spending money. Since we have become a one-income family, my spending has come to a screeching halt. I have money that I could spend but now when I go to the store or when I feel too lazy to cook, I really ask myself if my limited amount of money should go to that fast food burger, that pair of shoes, or that cute gift for a friend. Usually the answer is no.
  4. You need to look at all of your expenses and see how they can be lowered/eliminated based on your new lifestyle. We have been able to cut back on our cell phone contract (since I'm not working I don't use my cell phone nearly as much as I used to). A couple of months ago we cut our cable bill in half since we knew that soon our income would be reduced. We got rid of our second car quite a while ago and I am happy to ride the bus/carpool with the hubby if I am going somewhere--this simple move alone has saved us many thousands of dollars.
  5. For expenses that are not set, such as costs for food and clothing, you can really make some big cuts. Since becoming a one income family I have forced myself to shop at the Goodwill (and loved it, surprisingly), cooked at home nearly every day (to where eating out is a treat and not a daily occurrence), and cut way back on Starbucks (when I was working it was a daily habit; I have been able to kick this habit since it isn't part of my "work day" any more).
  6. Things I used to spend money on have been replaced by creativity. I simply don't have lots of money to throw around any more. The money we do have is pretty limited so I can't justify spending on many things like I used to and I can't reasonably spend money and expect to "make it up" with my next paycheck since I am no longer receiving any paychecks. This has resulted in me baking treats for parties instead of running to the store and buying them. I have declined a couple of invites to expensive restaurants with friends and with other friends I have had to suggest much cheaper options for going out.
  7. I have re-read the Tightwad Gazette. I was a fan of this book about how a large family survived on one income some years ago when it first came out and I recently reread it in order to get some ideas for ways to further reduce spending and save money. With the internet, there is no end to the information you can find on the topic. It is much better to learn from others than to learn from your own mistakes.
  8. Entertainment is now free. We haven't been to a movie theater in ages. We don't go out dancing every weekend anymore. When your income is reduced, you need to change your entertainment options to correlate with your income. Fortunately there are lots of free and cheap things to do to keep yourself entertained (see previous posts on this topic).
  9. We are changing our entire lifestyle to accommodate this change and to get more in line with our income. Big house? Gone. While we will be traveling for a while, should we decide to become stationary again we will definitely end up with a smaller home which is cheaper to buy, furnish, heat, air condition, decorate, etc. Our traveling will also be done as cheaply as possible (staying with friends and family instead of at hotels, being flexible with our flights to get the best rates, etc.).
  10. And some things that don't apply to us...hubby is retired and we live on his retirement income so there are some things that are different for us than for a young family with kids. Remembering back to when we were a young family with kids, if we had been a one-income family, I would have: made his life as easy as possible if he was the wage earner (ie: clean the house so we wouldn't need a housekeeper, make his lunch so he didn't need to eat out, etc). Cook as much as possible from scratch (this is healthier too). Use more creativity than money on the kid's birthday parties. You get the idea...

The bottom line is that a family simply can't live on one income of $40,000 like they did when the family had two incomes that totalled $80,000. Something (or many somethings) need to change in order to ratchet the cost of living down to half of what it used to be. That doesn't mean that your life will only be half as fun, you can only eat half as much, or you will be destined to be destitute. Plenty of families are actually thriving with less of everything (less money, less stuff, less Starbucks) but it takes both a shift in spending and a shift in attitude to accomplish this.

1 comment:

  1. Wonderful post! I agree, you have to watch your pennies on one imcome, but I think its worth it to be home with your kids!! :) (Or for me it is anyways!)