Newsletter
Living on One Income
The definition of family has changed throughout the years. It used
to be you would have a child and the wife/mother would stay at home
with the child. Nowadays, many families consist of two working parents
that bring in the necessary income to sustain a families' cost. More
now than ever, the economic times has required both spouses to work
full-time jobs (and in some cases more than one job each).
Many mothers (and fathers) would like the luxury of staying home to
watch their children grow and are doing so regardless of their financial
situation. If you are considering leaving your job to tend to your
young children there are a few things to think about.
First off, take a look at your budget. Evaluate all of your monthly
costs. Remember that your fixed expenses are going to remain the same
from month to month, while other bills or flexible expenses may fluctuate
each month. Calculate what your new monthly income will be without
your contributions.
There are some expenses that you will be able to eliminate if you
decide to stay home. You will no longer have to pay for daycare, which
can be very expensive in some places. You may also be eliminating
work related expenses like commuting, lunches out, and dress clothes.
These are just a few things that you will not have to worry about
paying for.
Talk with a tax professional to see if you can save on your taxes.
Lowering your annual income can drop you into a lower tax bracket
and lead to a smaller tax bill.
Of course, there are things that you will have to pay extra for now.
You may have to pay for insurance or join your spouse's family plan.
This can be expensive, but is absolutely necessary.
The best thing you can do is to plan ahead and practice. Start by
asking family and friends who have been living off of one income.
Their input can help you decide if the decision is one for you.
Try living on one income for a few months while you are both still
working. Pay all of your bills and buy all of your groceries with
your spouse's income to see if you can do it. By practicing for a
few months you can afford yourself some mistakes and try and correct
them before you do it for real. Use the saved income to help pay down
some bills or to build up your savings for any emergencies.
There are some things that you can cut from your budget that may help
you financially. You can downsize vehicles or even share one vehicle.
If you do not have to commute very far than you can have the stay-at-home
spouse drive you to work. It beats having to make an extra car payment.
Maybe you can cancel the newspaper or get rid of cable television
and try and find a more affordable phone plan. Staying home to raise
your child should be about spending more time with them and not watching
daytime television. Even the littlest expenses each month can add
up and make the difference between staying home or not.
When you choose to live off of one income you are taking a risk. If
anything happens to the earner it can lead to many financial problems.
If they have a job loss or injury there would be no income. That is
why it is important to have and maintain a healthy savings account
to bail you out until you can find more income. So if you cannot afford
to put some money away into savings, then you might have to reconsider
your options.
Another option you may consider is taking on a part-time job and working
enough hours to stay ahead. You can look for work during the hours
that your spouse can be home. That way there is always one parent
with the child. This can be straining however as it will take time
away from your spouse.
You can also look for some work that you can do from home. If you
are currently employed, you may ask if they have any way for you to
continue working from home.
In a perfect world, you would be able to take as much time as you
would like to spend with your children, however there is a good chance
that will probably never happen. So it is up to you to decide what
is best for your family and with a thorough examination of your finances
and a well thought plan you can decide what is best for yours.
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It is our policy at Pioneer Credit Counseling not only to help people get out of debt, but also educate in sound budgeting practices.
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