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Could Your Family Live On One Income?

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When people start having kids, sometimes they contemplate the fact that they would like one of the parents to stay home with the kids while the other parent works in order to provide for them. Unfortunately, in today’s day and age, this is often an incredible hardship with the costs of housing, food, gasoline, cars, etc. But with some careful planning and budgeting, you might be able to pull it off, if indeed it is that important to you. For us, we do plan on having my wife stop working once we have kids, and there will be quite a few sacrifices we will need to make in order to make this happen.

Really, the first thing you need to do is to know exactly how much money you bring in and how much money goes out the door each month, down to the last dollar.
If you don’t know that, you won’t know how much you will need to make each month or what expenses to cut. Figure out what the working parent will be bringing home each month, and figure out all your expenses for the month. This will give you a base figure to work with.

Figure out the money you will be able to save just by having one parent stay home. That parent won’t be driving as much, which will reduce your gasoline expenses, and you can often get a discount on your car insurance by driving less. Check with your insurer to see if you can qualify. You also will not need to pay for daycare, work clothes for the stay at home parent, etc, and see what other things you will be saving money on.

If your income and expenses don’t match up, figure out where you need to make cuts in the budget. Do you have subscriptions to things you don’t need to live and would be willing to give up? That would be things like movies by mail, Tivo, reducing your cellphone plan minutes, premium cable channels. For us, giving up things like these would be easy if it meant being able to make our plan work. Also, eating out less will save you a ton of money.

Reduce the funding of your retirement accounts for a little while. Some people will scoff at this, but really…if you want to stay home with your kids, you might think about doing this. You can always play catch up in a few years, and sacrificing some retirement savings to be able to stay home would be worth it to us.

Don’t forget the tax write-off that your children provide. This will save you money on your taxes every year, reducing the amount you need to bring home.

Consider moving somewhere cheaper. This will be a big one for us, as we already made a ton of sacrifices in order to live down by the beach. Once our first child comes, we will probably end up moving away from California, where we can actually afford a house with a yard and a school that we will feel OK about sending our children to. Plus, the overall cost of living here is so expensive that just by moving, we would save a lot of money on regular old household things like groceries.

Think about getting a second job. I know that we all put a lot of hours in at work and the thought of going to yet another job afterwards is not something we enjoy thinking about, just how important is it that someone is home with your child all day? I remember my Dad took a second job when we were little, before he started making the big bucks. He worked at the liquor store for a while part time, and then at the bowling alley. Even if it is only a few hours a week, that extra $200+ a month could really go a long way to making your dream a reality.

Although it seems insurmountable, oftentimes with strict budgeting and some sacrifices it is possible to have one parent give up their paid day job to stay home with your kids, if only until they leave for elementary school. Friends of ours in San Francisco, one of the most expensive places to live, did not think they would be able to…and that was 2 years ago. With some careful thought and reworking of their financial situation, they were able to achieve their goal, and now with baby #2 on the way, they will have to scrunch even more. But they still plan on doing it, and you might be able to as well.

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Comments (25)

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  1. Sick Of Debt says:

    We recently went to the one-income route and it has gone great so far. We decided to rent out several rooms in our huge home (bought too much home and the market isn’t too great) as well as go the route of two jobs (was up to 4 at one time, have cut some of the less-producing ones so that I can spend some time with our daughter). Keeping an eye on our expenses every month is helping us get out of debt while I work.

  2. david says:

    Renting out rooms is definitely a good way to cut your expenses, congrats on making it work!

  3. Great post! Although we don’t (yet) have kids, Hubby and I will soon be slashing our income from two to one (I am quitting). As a result, our finances will significantly decrease. I’ve been checking out other blogs, looking for ways that other folks stretch their money. Thanks for the great post!

  4. Mark Shead says:

    There are a lot of options for working part time from home now. The stay at home parent could easily bring in a few hundred dollars a month doing a side job in the evenings.

  5. david says:

    Thanks for the comments guys, and yes Mark, there are great opportunities to bring in some extra cash on the internet!

  6. KMC says:

    We moved to one income when our daughter was born and made it work just fine for a couple of years until my wife wanted to start full-time again.

    She got an evening part-time job not as much for the income as to get out of the house and interact with adults (albeit adults in a retail setting – yuck).

    Also, thanks for having the courage to recommend reducing retirement savings, if necessary. It’s a perfectly legitimate strategy.

  7. [...] David at My Two Dollars is talking about the question of transitioning from two incomes to one. If you’re working (you know, for a paycheck) and you’re not sure your family could make the financial adjustment needed to stay home with your kids, check out Could Your Family Live on One Income? [...]

  8. david says:

    Too me, being able to spend time with my kids when they are young would be more valuable then extra money in my retirement account. You only go around once; you might be long gone before you can even retire. Thanks for the comment and sharing how you guys made it work!

  9. Stu Mark says:

    This post has been nominated for a Hot Stuff Of The Week at our site, GNMParents. Good luck in the voting!

  10. pf101 says:

    This is a great post and something important to talk about/plan for with your spouse. Personally, I don’t have kids, nor am I married but when those things do happen I hope to be prepared. I plan to try to live with my spouse off of just one income whether we have kids or not. Just because you have the extra money, why spend it. Better to just pretend like you only have one income and put the rest towards savings. That way, when something happens, you’re already prepared and it won’t hurt so much to cut back.

    Thanks for the post, I’ve made a Post of the Day

  11. [...] MyTwoDollars considers whether it would be possible to live on jusy one income. An interesting discussion that demonstrates how modern life is so different from that not so many years ago. WereInDebt explains the importance of involving your partner in the day to day running of your finances. [...]

  12. Well yes, totally we can live off DH’s income. Mine, no way, but then I don’t earn much. We bought our current place on his income, we planned our expenses on his income, and we save for retirement on his income. My income basically pays for taxes if that. But I need to go to school so not working is probably not an option.

    Good post, but I don’t know if I would cut retirement, I might be willing to consider a second job above that. Or alternate shifts at work for the two parents, but retirement? There are no loans for retirement.

  13. [...] this money-saving, fat-burning game myself recently, I had to make a special note of this article. Could Your Family Live on One Income @ My Two Dollars: As a family that lives on one income, we understand the sacrifices we have to make. And yes, I [...]

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  16. David says:

    True, Livingalmostlarge, but there aren’t any loans for spending more time with your kids either…and to us, that would be the most important thing to do even if it meant sacrificing something else. Thanks for the comment!

  17. [...] Carnival of Personal Finance. But that does not mean that you shouldn’t! My post about how your family can live on one income was included, along with a ton [...]

  18. [...] Some extras from the last Carnival of Personal Finance that I am just now getting to: My Two Dollars gives pointers on what you need to think about before moving to living on one income. [...]

  19. Fraktfritt says:

    There is not a chance that you can live on one income in Sweden. I´d almost go as far to say that 2 incomes are a stretch!

  20. Maureen says:

    Reserves are important…We don’t send all our troops to the front line…When planning a family life living off one income is wise…Having a “reserve” the other spouse incase of emergency makes those hard times livable…However living off two incomes is dangerous should one fall who will pick the other up? I lived both ways and definitely have found that the one income route is the best.

  21. [...] mentioned in a previous post about single income families, see if you can have one parent stay home. That way you don’t have to pay for day care and [...]

  22. [...] Could Your Family Live on One Income @ My Two Dollars: As a family that lives on one income, we understand the sacrifices we have to make. And yes, I watch the two-income families in my neighborhood having their lawn mowed, dry cleaning delivered and house remodeled. For us, it’s worth the sacrifice. Related PostsThe Dough Roller to Host the Carnival of Personal Finance!103rd Edition of Carnival of Personal FinanceThe Daily Dough (19 June 2007)The Dough Roller Will Be Hosting The Carnival of Money Stories!Carnival of Personal Finance #102If you’re new here, you may want to subscribe to my RSS feed. Thanks for visiting! [...]

  23. [...] Could Your Family Live On One Income? (@ My Two Dollars) [...]

  24. [...] Could Your Family Live on One Income @ My Two Dollars: As a family that lives on one income, we understand the sacrifices we have to make. And yes, I watch the two-income families in my neighborhood having their lawn mowed, dry cleaning delivered and house remodeled. For us, it's worth the sacrifice. [...]

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