Part 2–How to Survive on One Paycheck–1950’s Style
Ready to take the next step to being a stay-at-home mom or spouse living on one income? Here is Part 2–How to Survive on One Paycheck–1950’s Style
Or maybe you already have gone from two incomes to one due to layoff or illness? Either way, the idea of living on one paycheck can be daunting. For the purposes of this article I am going to assume that the decision has already been made, one way or another, that this is going to be the case, and you just need to know What now? If you’ve read Part One, we’re ready to move on.
First, take a deep breath. Yes it’s scary, but it’s really not as bad as you think. People all around the world find themselves making this transition every day, and they survive and often thrive! Obviously, if you aren’t thrust into being a one-income family due to job loss, illness, or injury, it’s easier because you can plan for the transition. So let’s talk about that first.
1. When possible, plan for the transition to one income. Ideally you will have time to plan ahead and if so, there are things you can and should do before leaving your job. First, talk to you financial planner and tax professional. Tell them your goals and ask them the best way possible to make the transition. Second, start living on one income immediately and use the second income in whatever way your financial planner suggests. That may be to pay off debt. It may be to invest and build up an emergency fund. It may be some other option. Only you and your planner will know that answer. Make a plan and stick to it.
The remainder of this list applies to all families who are making the transition, be it planned or otherwise.
2. Know your “Why”. You have to not only know why you are making this change, you have to believe to the level of conviction in the reasons why you are making this change. It is those reasons that you are going to think about when you are having a tough moment. Your Why will get you through. Some common reasons are:
1. You want to raise your own children (or be there to help with grandchildren). There is much debate about whether putting children into daycare at a young age is harmful or beneficial, but you don’t want to take any chances. You want to be the one to witness all of your children’s “firsts” and you want to be the one imprinting strong life values into their little brains.
2. You want and need to be home to care for a sick or aging parent or relative. Their quality of life is paramount, and you want to wait as long as possible before you have to place your loved one into an institutional setting.
3. You or your spouse has suffered illness or injury and you must make this change. On the list of life’s most stressful events, this is up there with death of a spouse.
4. You or your spouse are starting your own business, and it will take time to turn a profit.
5. You and your spouse have decided to live traditional gender roles, or you’ve decided to reduce your impact on the environment, or any other values-associated reason.
Whatever your reason, you must frame it in your mind in such a way that the importance of it is greater than your desire to run from the challenges of living on one income.
3. Learn to live without comparing yourself to the Joneses. You will need to learn how to be content with less. You will need to learn not to compare your home, clothing, cars, vacations, meals, and anything else to anyone else’s. But don’t worry. You will soon discover that less really is more. When you remove the stress and chaos of trying to keep up with the Joneses in the first place, you may discover that you find joy standing in its place.
4. Understand that you aren’t really losing an entire income. You never really had that full income in the first place. Who had it? Travel costs (bus, car, fuel, tolls), daycare costs and “guilt gift” costs (those toys and treats you buy because you feel bad that you aren’t there all the time), career-related wardrobe and dry cleaning, the daily coffee on the way to work, purchased take-out lunches, the afternoon vending machine pick me up, outside gym costs, higher grocery-related costs (because you don’t have time to cook from scratch), convenience take out dinner costs (because you’re too tired to cook), parking fees, higher insurance (due to mileage to work), health-related costs (due to exposure to more illnesses), landscaping company fees (because you never had time to do it yourself), the dog groomers, and so on. All of this and we haven’t even discussed the fact that a second income may even be taxed at a higher tax bracket than you realize.
When it comes down to it, there are a number of different statistics but just the expenses related to having any job can account for up to 30% of your income, not including daycare and all of the other extra convenience expenses you accrue along the way. Add those in and you are likely spending upwards of 50% of your income just to maintain your job–before the additional tax exposure due to a second income.
The savings associated with one spouse staying home doesn’t stop at these either. Often the expenses related to the remaining working spouse reduce because there is someone home to make that morning coffee, prepare and pack their lunch, clean and iron their clothes rather than send them out for dry cleaning each time. Even simple things like eliminating late fees because someone had the time to pay attention can add up.
As you can see, the impact on your family is not going to be as dramatic as you expect. Plus there are ways to save money that we haven’t even begun to discuss.
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