What are the most important questions to ask when you’re thinking of becoming a one income family?
If you’re thinking of transitioning to a one income family, there are some very important questions you need to ask if you want to ensure a smooth transition.
Going from two incomes to one is a big step. It helps if it’s your choice to live on one income and not because of a sudden change in your circumstances (like a job loss).
Whatever your situation might be, it’s smart to think about these questions before you make the leap.
We have been a single income household for more than ten years, and I can honestly say that it’s not the easiest thing to do.
Having to say no to your kids multiple times because you can’t afford a toy totally sucks, but life does get better if you work at it.
We became a one income family at possibly the worst time for me. I was pregnant with my second child and I had lost a big chunk of my income.
Needless to say the first few years of becoming a one income family were pretty rough financially and emotionally.
I didn’t choose to become a single income household, but my marriage broke down and I had no choice. There was no time to prepare or save or do anything like that.
It was sink or swim for us and I chose to swim.
So if you are a two income household wondering how to transition to a single income family, I have a few tips for you that will set you up for success.
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TRANSITIONING TO A ONE INCOME FAMILY: 6 MAKE OR BREAK QUESTIONS YOU SHOULD ASK
1. DO YOU HAVE AN EMERGENCY FUND?
I am sure you’ve heard a lot about the importance of having an emergency fund so I’m not going to beat this topic to death.
Before transitioning to a one income family, it’s imperative that you have some money saved up for emergencies.
Since you will be living on a single income, your disposable income is going to take a hit so you need a buffer to fall back on in case of financial emergencies.
Without emergency savings, you may resort to borrowing money which is not a very good alternative when you’re living on one income.
So if you don’t have an emergency fund, start building one right now if you have the time (I know some of you may not have the time if you’ve recently lost your job).
Start by saving up $1000.
In my experience, this amount is the most difficult to save, but once you cross this hurdle, it becomes easier to keep adding to it.
Do everything you can to save this amount. Yes, that includes selling used and unwanted items, trimming stuff off your budget or working over time. Do whatever you can to fund your emergency savings.
After you save the first $1000, keep adding to it until you have at least six to twelve months of living expenses saved. You can always save more if you want, but this is a good goal to start with.
2. DO YOU HAVE EXISTING DEBT?
Do you have existing debt? If yes, are they under control?
What I mean is, do you have a repayment plan? Do you make regular payments on your debts?
If you become a single income household can you continue these payments or will you need to negotiate with your creditors or worse default on your debts?
These are some serious questions you need to consider before you downsize to a single income.
If paying off your existing debts is gong to to be a big problem for you, then you may have to remain a two income family for a bit longer so you can focus on paying off some of your debt or at least reducing them to something you can manage on one income.
When you live on one income, it’s very hard to keep making payments on your debts especially if you’re struggling to make ends meet.
So consider this carefully and don’t make any hasty decisions especially if your credit score is important to you.
3. DO YOU HAVE A BUDGET?
You knew this was coming right?
Don’t even think about transitioning to one income without a budget.
Yes, it’s true that you can live without a budget, but why would you want to do that when a budget can make your life easier and more manageable?
If you are not used to managing your finances with a budget, there’s no better time to start than when you’re thinking of living on one income.
So take the time to create a budget because it’s the most important tool you need if you want to live well on one income.
Here are some helpful posts on budgeting and how to create them.
Here are some helpful books on budgeting. Check them out!
4. ARE YOU PREPARED FOR SOME LIFESTYLE CHANGES?
When you go from two incomes to one, you should expect to make some adjustments to your lifestyle.
Some families run into financial trouble because they refuse or fail to make some necessary changes to their lives.
Unless you earn a lot of money, you should be prepared to give up a few luxuries or non-essential items if you want to live on one income.
Going from two incomes to one is all about trade offs. In most cases, the trade off is less money and material things for more time with your family or raising your kids.
What you have to give up depends on your current lifestyle and what you can afford on one income (that’s why you need a budget).
Make sure everyone is prepared for the lifestyle changes that’s going to happen and everyone is on board.
There’s nothing more frustrating than for one party to keep spending money or trying to live the same way as when you earned two incomes.
If you have older kids (or kids old enough to be affected by the transition), make sure you prepare them for the change. Let them know what to expect.
It’s nice and easier when everyone is on board and willing to make some sacrifice.
Some common lifestyle changes include:
- Fewer toys and gifts
- Eating out less often
- Buying used clothes and other items instead of buying new
- Staycations instead of vacations or local travel instead of international
- No cable
- Downsizing to one car instead of two
- Downsizing the home
You get the idea.
Do whatever you need to to ensure a smooth transition from two incomes to one.
5. DO YOU HAVE A STABLE JOB?
First, let me say that I don’t really believe any job is truly stable, but some jobs are more stable than others.
Before you hand in your resignation letter (probably mom), does dad have a stable job?
The last thing you want is to give up one income, then lose the second one without warning. That’s something else for you to think about.
Sure it may be easy to get another job or the stay at home parent can always go back to work, but things aren’t always that simple.
That’s why you need an emergency fund and why you have to consider job security when you’re considering living on one income.
6. CAN THE INCOME EARNER POTENTIALLY EARN MORE?
I decided to add this question because there are times when one parent really wants to stay at home but the math just doesn’t work. If that’s your situation, all hope isn’t lost.
The first thing you can do is to explore the possibility of earning more income with an existing job or a side hustle.
Are there ways you can earn more from your job or business (if you own a small business)?
Can you work more hours? Take on more responsibility or clients? Can you work at getting a promotion so you can earn more money?
When I worked as a registered nurse, I used to sign up for extra shifts because we needed the money.
Yes, I had to pay for child care, but the money I earned was enough to cover that expense.
Something else I did was to work on holidays when most people don’t want to work. I had two jobs working per diem (as needed). One paid time and a half while the other paid double for holidays.
Guess where I worked during the holidays?
For example, back in 2012, I worked the last shift on December 24th and the first shift on Christmas day (16 hours back-to-back) and I got paid $68 an hour!
It was a lot of money and we needed it to make end’s meet. I finished work early enough to still enjoy Christmas dinner with my kids and it was all good.
Downsizing to a one income family is all about making sacrifices and taking advantage of opportunities to earn extra money.
If making more money through an existing job isn’t an option, you can consider starting a side hustle or taking a second part-time job to help you transition to a single income family.
There are so many ways to make this work, it all depends on how much you want to become a single income family and what you’re willing to sacrifice.
HOW TO TRANSITION TO A SINGLE INCOME FAMILY
Living on one income in a two income world can feel like a scary prospect, but it’s actually possible.
Many families are doing it and there’s absolutely no reason why you can’t do it.
All that is required is some careful and advance planning (if possible), and a commitment to do whatever it takes to make it work.
You can use these questions as a starting point for planning your own journey, and I hope everything works out for you.