Living on a prayer can sometimes feel easier than living as a one income family. Things are expensive! By the time you’ve spent the transportation cost to get anywhere, you’ve probably spent too much money.
One of the best advantages of being married is the chance to have two sources of money.
Oh, and love, too. That unconditional agreement between the two of you is pretty swell, especially because it is legally binding.
Becoming a one income family is something Jenny and I are aware is always a possibility whether we like it or not. Jobs love to fire people. Industries get a kick out of failing just because a new presidential party is in charge. We know this is always a possibility no matter how hard we work or how secure we may feel.
Other life events could always cause us to become a one income family, too. Whether by choice or an unforeseen circumstance, many of our major life decisions and purchases are with the idea that there could be a time when there is only one household income streaming into the bank.
There are some of those considerations we and many other middle class families will need to make if this is something you ever plan to do.
1) Becoming a one income family means buying less house
Our biggest purchase we will ever make will probably be our house. I mean, in the future I could be up for a robotic skeleton of some sort. Science is pretty remarkable. Until then, it’s our home that has the honor of being the biggest bite out of our finances.
We weren’t able to buy our house with cash which means we have a mortgage that needs to get paid off. When home shopping, one of the big considerations we had was whether or not we could afford the monthly payment on only a single income. It was one reason why we chose a 30-year mortgage over a 15-year. On a 15-year plan, living on one income is unreasonable. It would put too much of a strain on us. Every planned vacation would become a staycation. Every planned staycation would become a day at our vocation.
Having a smaller house has its own advantages, too. Try cleaning a home with four extra rooms you don’t need. You realize you’re paying for extra walls that do nothing but store air. Big houses are overrated and usually haunted anyway by Victorian era ghosts anyway.
2) Becoming a one income family means a bigger emergency fund
Jenny and I prefer to lean toward the heavier side of an emergency fund. Becoming a one income family definitely means you’ll want to have some available assets in case your one income gets worse or becomes non-existent. No matter what industry you’re in, a scandal can change your whole present and future.
A general emergency fund rule is to have three to six months of expenses. When you’re trying to live on a single income for the family, bonus finances in your emergency fund can save you a lot of grief and worry. As long as you aren’t just parking your money under a mattress and doing wise things like investing in a ROTH IRA along the way, a larger emergency fund is solid protection.
Having “F You” money goes both ways. You want enough stored up to say it to someone else when you quit. You also want to have enough stored away to say it back to someone who just made a decision that told you to “F Off.”
3) Becoming a one income family means thinking about the future a lot more
Everybody should be thinking about the future. It’s coming after all of us like some sort of slasher movie villain. Becoming a one income family involves a lot of future planning. How big is your family going to grow? Where do you plan to live? At what age do you hope to retire? These questions, and more, should have an answer even if it ends up being wrong.
When you’re a family with only one income, you need to always have an idea of what’s next. You don’t have the financial luxury to make some of the other moves families with two incomes do. Living dangerously is not a wise strategy. Leave that up to international men of mystery.
During periods when Jenny and I were a one income family, we were much more careful with our spending. You see the difference pretty quickly. Suddenly, each month you’re not investing or saving as much as you used to. Preparing in advance and changing things on the fly is important to getting by with a single paycheck.
4) Becoming a one income family means investing more
Investing as much money as you can afford, as soon as you can, is good advice for everyone. What about a family with only one income? They must be different. They should be more practical with their money and hold onto it.
Not at all. When you plan to live on one income, the time spent when you do have two incomes is valuable. It’s the perfect opportunity to invest extra and load up for your nest egg. There’s no telling how old people will live in the near future. Some say the first person to live to be 150 has already been born. Personally, I find that to be a huge responsibility for Keith Richards.
If you’ve always been a single income family, there isn’t much preparation you can do. Those one income families with little left over to invest should rethink where they are spending to find some extra money somewhere.
5) Becoming a one income family means changing your lifestyle
As important as the other practical pieces of advice is the changing of your mindset. Your lifestyle has to completely change when you’re living on one income in a family of two or more. Tame unnecessary expenses. Life is always easier with more money no matter what your boss may tell you when they turn down your request for a higher salary. Mo’ money does not equal mo’ problems. Money solves problems.
You should never jump straight into becoming a one income family if you can help it. Give it some preparation and make sure you’ve crunched your average monthly or yearly expenses enough to see if you really can get by earning less together. Don’t stay at a job too long if it’s destroying your soul but also try to see if you can at least get all of your ducks in a row before quitting.
Jenny and I already know there will be a time when we do have to scrape by on one income. We’ve already done our best to minimize expenses, load up our emergency fund, and live our life as if we do only have one person earning money. It sets up the transition much easier.
Imagine not knowing what a bidet is and suddenly you sit on a toilet with one. Preparedness and awareness are two practical goals anyone with the plan to live on one income should have in their toolbelt.
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The book that convinced us to start investing and being more proactive with our money and lives: The Only Investment Guide You’ll Ever Need by Andrew Tobias
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