How To Survive And Thrive As A Single Income Family
One of the biggest decisions couples face after having kids is whether to have one parent stay at home full-time or whether both parents should return to the workforce. Unfortunately, with rising consumer debt levels, record housing prices and stagnant wages, there are more families these days that are relying on two incomes just to get by.
Three years ago we decided to try and live on one income after finding out we were going to have our first child. I’ll be honest; I didn’t think it was possible at first. I knew we would have to make sacrifices in order for us to survive as a single income family, but when I crunched the numbers I realized that we could make it work. Here’s how we survived, and now thrive, as a single income family:
Live Off One Income While Still Earning Two
Since we had another six or seven months with two full incomes, plus a year of maternity leave benefits, we knew that we had some time to ease our way into living on one income. The key is to recognize this early and start preparing by cutting back on expenses and saving more money every month until you’re comfortably living on just one salary.
The benefit to preparing early is that you’ll start developing some frugal habits that won’t be so shocking to your lifestyle after the second income disappears completely. The extra money you save over that period of time can be used as an emergency fund in case something unexpected comes up after the transition to a single income.
Use a Budget to Track Income and Expenses
Using a personal budget is not for everyone and it can be tedious to track every penny you spend. That being said, you should monitor your income and expenses for a certain period of time after any big change in your financial situation. Becoming a single income family definitely qualifies as a major change.
To help us get a big picture view of how our financial situation would change over time, I created a spreadsheet to forecast income and expenses over a 12 month period, which showed how much we would need to reduce our expenses by to reach our goal. I also started tracking our monthly spending so we could get a good handle on our fixed and variable expenses.
Delay Your Big Purchases
It might be hard to watch all of your friends taking expensive vacations and buying the latest gadgets while you drive around in your 10-year old beater and consider camping for the long weekend as your summer vacation. With a bit of patience though, you can still enjoy the finer things in life.
We lived in a 2 bedroom, 1 bathroom starter home for over eight years and if we wanted to have another baby we would eventually need to upgrade our house.
Rather than immediately jumping into a bigger home, we took our time and delayed our purchase by over a year. This allowed us to get more comfortable living on one income and gave us the opportunity to save for a larger down payment. After some serious saving, we ended up building a house.
Find Other Ways to Save Money
Having plenty of time to prepare for single income living, we were able to find several other ways to save money and reduce our expenses. Here are some tips to save money that help us survive as a single income family:
- Plan your meals – The single biggest money saver for us was planning our meals in advance and cooking at home every night. We were spending well over $1,000 every month on groceries and dining out, and were able to reduce that to $600 a month by meal planning. Not only have we saved money, we are healthier than ever and we’ve actually become pretty good cooks over the past few years.
- Shop around – We looked at all of our recurring monthly bills and decided to shop around for better rates. We were able to save on auto insurance premiums, save on cable and internet bills, and save on heating and electricity just by making a few phone calls and asking for better rates. If you make a habit of doing this once a year you can typically save at least 10% off your bills.
- Use rewards wisely – There was no point saving up all of our Air Miles points for a dream vacation. We started using our rewards cards points to redeem for products like groceries and gas. Between PC Points and Air Miles we are able to earn an extra $50 a month in free groceries and gas.
It’s not an easy decision to try and live on one income. The good news is that you usually have some time to give it a chance before determining that you simply can’t afford it.
After a few months of struggling to save money and reduce our expenses we eventually found our groove and are not only surviving, but thriving as a single income family.
Reads like good tips for those without kids as well 😉
Good post Echo!
Thanks Mark!
This is where it is nice that both of us are teachers. With great maternity benefits and a lot of time off anyway, there is a lot of flexibility. We think that when we choose to have children my significant other will likely plan to take a few years off completely and then work part time. Hopefully I will be able to join her in working part time around the time the kids hit 10-13 (freedom 45 plan). One benefit I found when looking at parental leaves is that you often don’t have to pay union dues, and by the time you pay less taxes on your income, you actually make most of your old take home-wage back. For Manitoba teachers I figure your net pay will be about 85% on parental leave, even though your gross is 70% and that isn’t even factoring in RRSP splits or the Conservatives new one-income tax break.
@My University Money
Sounds like a solid plan, although Freedom 45 sounds pretty ambitious. We can always dream though, right? 🙂
My plan was freedom 55 and I made it to freedom 54. Good luck with your plan, freedom is great.
Good post and good tips! You are totally right, it must be given a try before writing it off as not affordable! Most people just aren’t willing to put in the effort or give up a consumerism lifestyle to make it work. Budgeting, saving, and frugality, are all essential aspects of making a single income family work. Investing is also another important aspect too!
Hats off to you for make the decision, and then making it work!
@The Investment Blogger
Thanks for stopping by! I really didn’t think we could do it until we actually crunched the numbers and tried it out. It’s not as hard as some people think.
I think it is a matter of choices! I choose to live on my income and save my wife’s income. We downsized and our children are grown.
@krantcents
You bring up a good point, it’s all how you choose to live your life. With two working parents, your savings can go pretty far if you can bank one salary.
Very good points. We have been a single family income for 12 years now. You adjust and you live with it 🙂 In fact, I don’t understand how poor double income families are considering what comes in. They should really have a solid nest egg as they reach the 40s.
@The Passive Income Earner
12 years, wow…that’s great! I don’t want to be too hard on two-income households, as I’m sure there are plenty of dual-income families making less than I do. That being said, I’m not making six figures either, so I think everyone should look into the possibility.
My wife is a preschool teacher, so we have to live off of one income for 3 months out of the year. By the time we get to August (now), we always seem to realize that we had planned insufficiently. One of these years we’ll get it right. 🙂
@Travis
Variable income is always hard to plan for. That’s why I like to set up a spreadsheet with income and expenses for the entire year to help manage the peaks and valleys.
Planning your meals is a big one. Food is among the biggest expenses any family will have, and a disproportionate cost is when you are running errands, take longer than expected, get hungry and have to eat out. One good strategy is to always pack extra snacks:
– a box of energy bars (meal replacement)
– a container of fruit (oranges, bananas, apples, etc.)
– extra water bottles
Great article my wife and I did something similar. When we were in college we new that one of our incomes wasn’t going to last. So we started planning for the day when my job would end and I would be with out a job. So we decided to try and live off the lowest persons income. While this was VERY difficult it made both of us more aware of things we were buying.
I also agree with the food budget we do about $170 for two weeks. We rarely go out to eat. When we do we get all upset because we feel as though we wasted money. A $40 meal could feed us for about a week.
Anyways great article. And completely practical.
Suggestion: How about how to survive on low wages and still live in a safe place, maintain a car, buy insurance (medical, car, renter’s) when employers lowball your wages, cut hours and try to lay you off and deny unemployment? I’m single, older, female and have basic office skills which are not valued. I keep getting shuttled into call center jobs which are really sales jobs and waitress jobs are being called customer service positions. I don’t want a title I want to thrive.