Surviving on a Single Income
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I have two very young kids, ages two and three. Every time I go to work, I feel guilt for having to leave them with our babysitters. My partner and I decided that it would be best to resign from my job and be with the kids. I’m OK with that, but also very anxious about making ends meet. I’m about to resign at the end of the year. Please do give me some guidance on how we can live normally on my husband’s salary alone. - Kat
Good thing you discussed the issue with your partner and have both reach a common ground. However, this decision comes with a huge sacrifice. It means you’re purchasing power will be reduced and you will become entirely reliant on your husband’s earnings.
Given the high inflation rate which translates to higher cost of living over the year (remember you kids will go to school too), you may want to try running part-time from home for now, instead of giving up work altogether. You can pursue a hobby and make money from it in the comfort of your home. For instance, if you love writing, why not try blogging? There are many people out there who quit their full-time job and are now pro-blogger-even earning multiple times than what they’ve used to earn from their 9-5 jobs. Not only will you get to spend more quality time with your kids, you will also contribute in adding to the family coffers.
In time, if the load of taking care for your family increases, you can re-evaluate your working time, and maybe by then you will be prepared to become a full-time wife and mother. Of course, this is just one choice. If you are all set to give up work at this time, that is fine too.
Since you still have about five months left until you retire, I encourage you to do two things:
1. Put into practice living on one income for the next five months. This will help you assess your financial resources and adjust your lifestyles. Live as if you are already surviving on your husband’s income. No qualm this will be challenging, but practicing now will enable you see how you can live simply. Begin by cutting down on eating out. Bring lunch to work. Start taking public transportation if you have been used to taking your car. Cut down on splurges, such as home massages, weekly movie trips, travels and visits to your favorite coffee shop. There are many ways to make lifestyles simpler.
2. Save your income for the next five months. Since you will be living on your husband’s income, put your income away as an emergency fund that can support you in times of crisis. You will need this fund to dip into in emergency cases so you won’t have to have a loan and pay for the cost of borrowing.
This fund may be placed in financial products that may earn more interest, such as high-interest savings deposits, mutual funds, stocks, time deposits, bond funds or equities funds. Putting your money in such instruments will give you more interest than a regular savings account.
Once you have resigned from work:
1. Watch your costs.
Don’t stop paying close attention to your cost of living when you finally resign, even if you have already practiced for seven months. Make it a habit to find more ways to save money. For instance, instead of having two babysitters, maybe you’ll only need one now since you’re stay at home.
2. Budget.
Make it a regular habit to write down expenses and Go over these at the end of the month. See if you have lived well on your husband’s salary. If not, make some changes and cut more on other expenses (e.g avoid coffee latte, diet cookies etc ? )
3. Shop intelligently.
Find out where you can get groceries and other necessities at lower prices that are reasonably accessible to you and patronize that store. When shopping for furniture and home items, consider going to secondhand shops. If you are a regular shopper of a store chain with a rewards program, rack up points to be exchanged for rewards. Maximize your credit card’s rewards program but buy only what you need.
4. Don’t neglect insurance.
In the course of saving and living simply, you may be tempted to lay aside availing of insurance coverage. Insurance preserves income in untoward incidents like sickness and death. Get life insurance for you and your husband and health insurance for everyone.
5. Save for your retirement.
Retirement may be the farthest thing in your minds right now, but saving for your retirement this early will let you reap the benefits in the long run. Compound interest over the years will let your fund earn more. Look into getting a pension plan, or do a self-styled investment plan in consultation with a financial advisor who can help you determine how much you need for retirement, and how much you need to save from now on.
Living on one income will not be easy, but if you and your husband are steadfast to make it work, it will work.
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6 Responses to “Surviving on a Single Income”
Before you resign please consider the following; if you own a home you may want to consider getting an equity line of credit which can be tapped into in case of an emergency. I believe it’s no cost to have it available and you pay interest only on the money borrowered. Check into specifics but it may be easier to get this with two incomes.
Also, look into making any transactions that would be easier to make with the two incomes i.e. credit line increases, certain purchases, etc.,. Also, you may want to secure a part-time/work at home gig while you are still employed full time; it just seems easier to get a job if you are already employed.
I like the idea of stashing away the income in for the next 5-6 months.
Best wishes and Be well.
http://www.ourstockmarketjourney.blogspot.com/
By
Alisa (Who am I?) on Jul 8, 2008
Please plan your life, year by year. You won’t have small children forever. Some communities have full day PreK or Kindergarden so you could be looking to rejoin the work force for mothers hours as soon as the little one is 4 or 5 years old.
As a CPA that has helped clients through these tough years of having small children (also having 3 children of my own), you will find that once the kids are in school your world will change again. So plan for that now. You may decide to take this time to refine some skills so that when you enter the work force again it is at a higher wage. Definately my suggestion is plan each year accordingly. It is always helpful to see the light at the end of the tunnel when having to modify our life style.
Enjoy this wonderful time with your children. They are a blessing.
By
Deb Jones (Who am I?) on Jul 11, 2008
@Alisa: thanks for very valuable inputs
@ Deb Jones: Agree with planning your life on yearly basis. But life’s full of surprises and things always change. I guess to add to your suggestion, we also have to always prepare a plan B.
Thanks guys for your inputs!
By
moneyexpert (Who am I?) on Jul 11, 2008