Two-income families have become almost the norm in the United States, but some families, for whatever reasons, can and do get by on the earnings of just one breadwinner.
It requires planning and commitment, but it is possible.
Analyze Your Budget
Start with an honest and thorough review of your current financial picture. How much do you spend? How much of the spending is for necessities and how much for luxuries you could do without? Think of ways you could cut back, such as eating more meals at home rather than out. Use the analysis to make a realistic new one-income budget.
Plan Your Spending
Get over some old habits, such as whipping out the credit card whenever you see something you might like to have, but don’t really need. Based on your new realities, give first priority to the expenses of running a household. Plan for some savings and then limit spending for other things to what is left.
Six Month Emergency Fund
Experts advise a six-month cushion in case of emergencies. That protects against financial disaster when the breadwinner is laid off, becomes ill or injured – any of the multiple disasters large or small that life sometimes dishes up.
Experiment Before Losing The Second Income
Try out a single-income existence before plunging headlong into it permanently. While you still have two incomes, put one into savings for several months or a year to test how it would work in reality. The cached money could become part of the cushion just mentioned.
Ask Tax Adviser For Advice
Talk to a tax professional who can tell you what moving to a single income might do to your tax liability. Moving into a lower tax bracket may offset some of the loss you experience from reducing your income. But have the facts in hand before you take the leap.
Cut Down Living Costs
Search for ways to reduce your costs. Many two-salary households may find they have accumulated a number of trivial items that could easily be sacrificed in the name of the new one-salary mode of living. Cut down the number of channels you carry on cable. Assess your insurance policies to see if they are more than adequate or if you can save by bundling. Each household budget is different, but engage everyone in your group in setting priorities and trimming excess. It will be worth some sacrifice if circumstances now call for a one-salary approach to living.
