Many couples wonder about the secret to surviving on one income when it seems like they're just making ends meet with two incomes. Dual-income households, which in the United States are now more common than single-income households, have become the norm.
With the rising cost of living, it may seem necessary for families to generate two incomes. However, many families still find a way to thrive on just one income. Doing so often requires a careful examination of family finances and a commitment to making changes to ensure one income is enough for a family to thrive.
- Examine your spending habits. Having a clear picture of what is being spent each month will give you a better picture of which things are necessities and which are luxuries. Households that dine out a lot can likely save a considerable amount of money by eating more meals at home. Knowing how your money is being spent will help you reestablish your priorities and map out a plan to live on one income.
- Stay disciplined and organized. Some people grow accustomed to taking out the credit card anytime they want to make a purchase, oblivious to what they're actually spending until the bill arrives. If you are such a person but you want to successfully transition to a single income household, you will likely need to rein in such spending habits. Determine exactly what is needed to cover bills each month. Once you understand what's needed for the home, figure out how much you have left over. Divide that as necessary for savings and extra spending money. Knowing what you have to spend makes it much easier to avoid overspending.
- Keep an emergency stash. Many financial experts recommend having enough in a savings account to cover six months' worth of living expenses. This affords the household breadwinner enough time to find a new source of income in case of layoff and enough security to pay bills in case of injury.
- Prepare ahead of time, if possible. If you are currently living with two incomes, try living with one income for several months to a year and bank the other salary entirely. This will give you an accurate idea of whether you can afford a one-income lifestyle. This also helps to establish a sizeable nest egg as a safety net once you begin living on just a single income.
- Speak with a tax professional. In many cases, moving to one income will put you in a lower tax bracket. This alone can make it worthwhile to explore a one-income lifestyle. An accountant can give you a clearer view of potential savings.
- Trim the extras. If you look at expenses, you may find a number of trivial things that can be cut from your budget. Find out if you can save on cable costs by cutting down on the number of channels you carry on your plan. And you may be able to save by bundling certain products, such as insurance policies.
