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How We Prepared To Live On One Income

This was my intro post for the now defunct Moneyville blog, where I wrote a column twice per week for 2 years.  The blog was folded into The Star’s personal finance section in January, where I continue to write a bi-weekly column.  Enjoy.

As a thirty-something, single-income, two-child family, we are faced with plenty of financial challenges.  To further complicate things, my wife was diagnosed with Multiple Sclerosis a few years ago, which meant making sacrifices in order to live a healthier and more balanced lifestyle.

So, soon after our first child was born in 2009, my wife left her job as a medical office administrator to stay at home.  This reduced our household income by a quarter, so we estimated what our income and expenses would be for the next year and then had a close look at the numbers.

Related: How to survive and thrive as a single income family

We figured that in order to live on one income and make this work we had to come up with $1,250 a month in savings.  Here’s how we went about it:

  • The bulk of our savings came from not having to put our daughter in daycare.  The cost of full time care in Lethbridge, Alta., where we live was $750 per month.  We considered ourselves lucky that we didn’t live in Toronto, where according to Toronto Children’s Services the average cost of full time care for an infant was about $1,400 a month.
  • We reduced car-related expenses by $150 per month by dropping the collision coverage on our 12-year old Hyundai and saving on gas by using it only when necessary.
  • We saved another $100 a month by not spending that amount on my wife’s work clothes and on lunches out with co-workers.
  • We trimmed $250 a month from our grocery bill by planning our meals in advance, buying groceries in bulk, and cooking at home every night.

We could now claim the $10,822 spousal amount; a tax credit that can be transferred to the higher earning spouse if the lower earning spouse has little to no income, and the Universal Child Care Benefit of $1,200 a year per child.  This put about $250 per month in our pocket.

We have found that living on one income really isn’t as tough as we thought.  We might get by with a little less, but we live comfortably.  A year after our first child was born, I started this personal finance blog with my mom and I’ve been able to supplement our income through that and some freelance writing.

Related: Ways To Earn More Money

I think the sort of financial issues we face are fairly common, but I learned that in order to reach your goals you need to develop a plan, especially as a young family.  With the right plan in place it becomes easier to balance your day-to-day spending with your savings goals.

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7 Comments

  1. Sandi on October 4, 2013 at 5:03 am

    This is the same kind of thinking my husband and I did as we were contemplating the birth of my business. We wanted to be able to grow it patiently, without throwing money away and without feeling desperate for clients, so we took a year to prepare for living on his income alone.

    Aside: If I had stayed at the bank, with my fairly healthy banker’s salary, and put my three kids in daycare, my net income would have been -$2.00 a month.

    • Echo on October 4, 2013 at 7:41 am

      @Sandi – Yes, we came up with a similar calculation. We knew early on during my wife’s maternity leave that we were going to give this a shot, so we started living on my income and banking her EI cheques to build up a savings cushion.

  2. Michelle on October 4, 2013 at 8:29 am

    We are preparing to live on one income. We currently live on less than 50% of our total income, but soon I will be leaving my day job to pursue full-time freelancing. Luckily, we have been living on less for so long that it shouldn’t affect us too much.

    • Echo on October 4, 2013 at 8:57 am

      @Michelle – Good luck with your freelancing career!

  3. Bet Crooks on October 4, 2013 at 1:06 pm

    We were a little different in that we always lived off one income (though we each paid 50/50 of the living expenses, we just kept the total to a sum manageable with one income) so when we had the children, I could stay with them without (financial) hardship. We did this because layoffs were very, very common in our industry.

    We realize, though, that we are very fortunate to both be well educated, well employed professionals. I still give thanks that this was an option for us, because it’s not for many, many people.

    For those just starting their post-secondary education, if you have a choice between an education that leads directly to a career and one that doesn’t, stop and think seriously about your choice. Either choice can work for you, but one choice may make the path easier. (And since education is a never-ending journey these days, you can always add more in the future.) For example, my husband chose a co-op university program for the much-needed money and the much-valued work-term experiences. It made his path much more manageable.

    And Robb, the intangible benefits to your child/ren of having a parent at home may very well more than make up for any minor to medium financial restrictions. But you’ve probably already noticed that!

    • Echo on October 5, 2013 at 7:38 am

      @Bet – A co-op program can be very valuable and I wish there were more business-University partnerships so that more students could take advantage.

      And, yes, we love having the kids at home although I’m sure my wife can’t wait for them to start school full-time 🙂

  4. Simon @ Modest Money on October 11, 2013 at 12:48 am

    As its said, where there is a will, there is always a way. I think once you commit to doing something you start realizing ways to accomplish it which would not have crossed your mind in a million years.
    Am trying to live on half my income, pretty close to living on one income but for singles. The same principles apply, from reducing expenses to looking at cheaper alternatives. And with that I’ve built up my e-fund and shored up my savings! Little sacrifices now for a healthier financial future!

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