For whatever the reason may be, many families choose to become a one-income household at some point in their lives. While this is a totally reasonable decision, it should not be made on a whim. You should sit down with your partner and discuss the following steps to ensure that you can and are making the right decision. Here’s how to start the discussion.
Decide who will be keeping their job
To begin the transition, discuss with your partner who will keep working. Make sure you are both comfortable with the decision. Discuss what the responsibilities the other will have at home. Set out clear and concise goals and responsibilities before the fact so you or your partner isn’t left feeling overworked.
Figure out how much you need to live on
One of the most important steps before transitioning into a one-income family is to calculate the amount of money your family will need each month. Add up all your expenses, variable and fixed, to determine how much you’ll have to earn. Don’t forget any debt payments, annual expenses, and contributions to savings accounts. Once you have done this, create a budget based on what your lifestyle will be like with one income.
Pay off debt and start an emergency savings account
Before transitioning into a one-income family, start to pay off as much debt as you can and put more focus into building an emergency fund. Since you’ll be relying on a single income, try to beef up your emergency fund to cover at least eight to twelve months of expenses. You never know what the future will bring, so being prepared is essential.
Discuss health insurance and other benefits
Certain benefits may be lost when you leave a job. As such, your medical, vision, and dental coverage may become more expensive if you were relying on assistance from your employer.
Discuss your lifestyle
As you budget, you may realize that your current lifestyle is not supported by a single income. You may have to adjust your current lifestyle to fit your new means, which might mean dining out less, going on fewer vacations, or finding cheaper activities to participate in. You may also consider a bigger change, such as downsizing your home.
Test it out
Before fulling committing to a one income lifestyle, test it out for a month. Rely solely on one income while both partners are still working. Look for any noticeable changes throughout the month. At the end of the month, weigh the pros and cons of the experiment and see if you are ready to make the switch.