Part Two of our One Income series is all about the dollars & ¢ents. Since you are eliminating a large portion of your income when you transition from dual incomes to one income, you need to consider the impact it will have on your spending. Continuing to spend and save like you have the same income simply won’t work, so I’ll outline some ways to help you make the transition a relatively smooth one. You’re on your own with nighttime feedings though. 😉
Money Manager aka Family CFO
Who will be handling the bills? Assess this and make sure it is working well for both parties. Communication is key when it comes to money, you want to make sure that whoever is paying the bills is paying them timely and speaking up if things are tight one month. Setting up a weekly meeting and checking in daily about spending is always a good idea. If things are tight consistenty then it is time to assess the outgoing.
Cut Bills
What bills that can be lowered to save on outgoing money? Start with your big expenses and work your way down from there. We cut cable back to basic, cell phones plans were cut back, and we purchased used cars to reduce monthly outgoing costs.
Some other ways you may be able to save:
- take the trash to the dump yourself
- turn off the cable
- reduce driving to reduce gas costs and wear & tear
- become a one car family
- reduce electric and gas usage
- slash credit card bills by paying them down quicker (or if you have no debt, paying them in full each month)
Budget
If you are going from two incomes to one it is essential that you create a new workable budget. Make sure you are accounting for groceries including feeding the extra mouth(s), gas, maintenance on cars, maintainace on house, and expenses for children including clothing, diapers, and formula. The budget should be flexible in the beginning if you are dropping one income and adding a ne member to your family you may not realize how your spending will change until you are in the thick of it for a couple of months.
Always include a cushion in your budget just in case you have overages in some areas. Adding this flexibility allows you to not worry about every penny.
Some ways to trim your budget:
- use coupons on everything from groceries to meals out for special occasions
- shop consignment
- swap baby-sitting with your friends
- reduce services you don’t use/need
- eliminate subscriptions
Allowance
To live within the budget you need to make sure you are doing your part to spend less and cut costs were you can, but still allow room for fun and enjoyment. An allowance may seem like child’s play, but it can be a tool to make sure you and your spouse each have your needs and wants taken care of without resentments or overdoing it.
Set a reasonable amount for each person to spend each month and figure out how to allocate it. It may include necessities and wants. Consider it your opportunity to pick up that CD for your collection or get your hair cut and colored without your spouse criticizing your spending.
Cap Amount
If you think an allowance is not and option for your family consider a cap amount. Set an amount that if you spend over that amount you need to discuss it with your spouse first. So let’s say any purchases over $100 beyond grocery or gas should be approved by both parties first. This gives you the ability to spend without the guilt that can sometimes surround smaller purchases.
Combine Allowance and Cap Amount
A more through solution is to combine the allowance and a cap amount. Say your cap amount is $100, but add an allowance of $300/person per month. Spending up to $300 is fine, but you need to check in when you have a $100 or more purchase. Once you reach $300 you don’t spend more, or you talk about each purchase since that money will be coming from the general budget instead of your allowance.
What are some strategies you have for managing your family’s finances on one income? Have you been successful becoming a one income family? If so, do you have any tips?
Kelly
Great tips! Congrats on making to switch to being a stay at home parent. Sorry to hear about your medical bills. It’s frustrating how expensive those bills can get!
Kayla says
I recently decided to stay home to raise our baby girl. It’s less stressful, baby gets too be raised by family, I get to see my husband more than 2 times a week.
I write down everything spent-I have a budgeting book, and I only ask my husband to bring home his receipts for anything purchased on the card. He has an allowance per week, I don’t really need any money. Gas and that’s it, so I don’t bother with an allowance. When I gas up, I make sure to calculate it in before spending it to make sure we have enough.
Calculations: I calculate everything at least 2 months ahead. I take the money we have now and subtract what we’re going to spend, add his paycheck (weekly, so I have to subtract bills etc per week and add in his paycheck per week), and I make sure we’ll have the money for whatever we’re planning to spend it on. If not, I go lower for that purchase or if there’s excess, I plan to put it in savings.
We have about $5000 in medical bills from our baby being born last year and my appendectomy in March. We’re paying the smallest amount possible, and paying them off from the smallest to the highest. It gives you a sense of “Yay I paid off a bill!!” when you go from the bottom to the top in paying them off.
Bake bread, don’t buy it. Buy large 50pound bags of flour. I have a bread machine and to make 1 loaf of bread costs about 10cents. Versus buying bread is a dollar at minimum. Buy milk straight from the farm instead of at the grocery store. Much less expensive, and much healthier-it’s full fat, NON pasteurized milk. We (myself and siblings) were started on whole NON pasteurized milk at 6 months. Our doctor told my parents to do that. And we turned out fine; now you have to wait until they’re a year old BECAUSE THE MILK IS PASTEURIZED. All the good stuff is taken out.
Do stuff yourself as much as possible-the diy projects.
I don’t think I would ever be a stay at home parent. I think it is important for a person to have a career and identity outside of the home. If anything I would work part time.
I don’t think I would ever be a stay at home parent. I think it is important for a person to have a career and identity outside of the home. If anything I would work part time.
Matthew Kuehlhorn says
This is a great post with wonderful tips. My wife and I are down to one income and things are tight. Our communication can always be better around this. We have the weekly meetings that help out a bunch and a food allowance to keep us within a budget.
Thanks for the tips.
Great tips, Kelly! Many we’re doing, but some we’ve not worked out fully. Sharing with my spouse & others.
Great tips, Kelly! Many we’re doing, but some we’ve not worked out fully. Sharing with my spouse & others.
Tara@riceandbeanslife says
We worked on living on a single income before having our kids. This helped us trouble shoot before hand. We also found that we spend considerably less on “convenience” items and services when we are living on one income (I stay home with the kids). We are less pressed for time, most of the household needs are taken care of during the week and it leaves us with lots of time to have simple, low cost fun on the weekend that recharges all of our batteries. We found we were far more apt to spend more when we were both working because we were too tired to pay better attention to the details.
Kirsten says
I’d like to hear more about part time work for parents - particularly for moms. Why is it that it’s an all or nothing thing? We all want our daughters to study a craft that is their talent and interest, and yet when it’s time to have a family, it’s all about wanting to be a “working mom” or a “SAHM”. I want more opportunities for well paid professional, but flexible/part time work. To do both jobs well, and make ends meet at the same time!
Tabitha says
When my son was born last year, we became a primarily one-income family. I stepped down at work from a management position to an entry level team member. I maintain 16 hours a week now (I have to work EVERY weekend) so that we can still get our health insurance (which is taken directly out of my paychecks bi-weekly), and so that I can contribute to some of the bills when necessary. I sold my beloved sports car to cut monthly costs, and bought a cheap, old, used Honda that gets much better gas mileage. The only time I go anywhere is when it’s NECESSARY, otherwise, my son and I take the term “stay-at-home” to the literal level.
Overall, we have done pretty well. I think that the most important thing is that I am getting to spend quality time teaching and playing with my son during the day. It’s also nice to be able to work on my education while I’m home during the day.
Jen@mamazen says
Great post! I hope that we are in the position soon where we can have this talk for real, not just hypothetically!