Can Any Couple Starting a Family Live Off One Income?

Can Any Couple Starting a Family Live Off One Income?

That cloud of stress and apprehension building as you think about supporting a family off just one income is justified. Every suffocating breath is warranted — because raising a kid in the U.S. (the responsible way) is expensive. The term “expensive” is relative, so internalize the following numbers from the U.S. Department of Agriculture as you will.

  • $173,490 — Average family expenditures on a child from birth to 18 years old in 2012.
  • $21,000 — Estimated annual expenditures on a child less than 12 months old in 2012.
  • $38,310 — Estimated annual expenditures on a 17-year-old teenager by the projected year of 2029.

Dear couple dreaming of having a family in a single-income household, this is what you’re up against. As those numbers sink in, you may think about financial risks of living off one income, such as “more debt, less in retirement savings, atrophying skills and greater vulnerability to economic setbacks,” as MSN Money points out. Don’t forget about “lower lifetime earnings” and “lost pension credits.”

Still hopeful? The aforementioned numbers and risks aren’t meant to kill your hopes and dreams, but rather create awareness and help with smart decision making. Keep in mind the fact that having a family is unimaginably rewarding. Having one income for your family also results in less taxes, an eliminated commute and zero child care expenses. Meticulous planning is invaluable for living healthily and happily off one income. Whether you anticipate supporting a family off $100,000 or less than $40,000, the following guide can help you securely plan in advance.

Housing

Housing is a tough one, because you don’t want to downsize your sq. footage if a baby is on the way, but you do want to downsize your monthly cost. Here are some possible things to try:

  • Ensure that your rent or mortgage payment doesn’t exceed 25 percent of your gross (single) income.
  • Refinance your home at a lower interest rate while still living off both incomes.
  • Relocate to an area with lower costs of living.

Trial Budget

Start budgeting for a single income as soon as possible, and put your second income into savings. As you re-budget, find typical monetary downsizing solutions such as eating out less, cutting cable or selling your second car. Testing out a new lifestyle on a single income identifies spending and saving habits that are or are not working. Then you’re more equipped to actually leave behind that second income once you’re ready.

Debt

Eliminating debt before starting a family can ease future financial burdens. Start this new chapter of your life healthily by paying off car loans and credit card balances. Although that installment loan was probably a smart choice during last year’s minor emergency, paying it off before reducing your total household income will help foster financial discipline down the road.

Savings

Never stop saving, no matter how much you add to your savings account or retirement fund each pay period. Try to grow an emergency savings fund that equates to six months of your salary.

Perspective

Downsizing and changing your lifestyle can feel like a shock. Change your perspectives on wants vs. needs. Yahoo! Finance contributor K.W. Callahan describes “reaping the rewards of at-home living” as making the most of spending time with loved ones at low monetary costs. Replace pricey activities with less expensive or free ones by cooking a delicious homemade meal or watching a movie on the floor snacking on popcorn. Also, avoid keeping up with the Joneses and making lifestyle comparisons with others. Happily live within your means while enjoying at-home entertainment.

Job Skill Maintenance

Life comes with no guarantees, and an unexpected circumstance could cause the unemployed parent to look for work. Take evening classes or sustain your job skills through networking, freelancing or part-time work. Avoid losing touch with professional contacts and organizations. Volunteer in your spare time and keep your mind and body active.

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3 Comments

  1. I wouldn't say it is impossible, but very difficult. With the economy the way it is, it usually takes 2 incomes to support children.

  2. I don't think it is. If your husband doesn't have a good job making great money then it takes both people to make it. I know after having children its so hard to leave your child to go back to work. It's just so hard to make a living without 2 people working together.

  3. My husband and I did it but we had help from family. His mom had a Sam's Club ( like Costco) club membership and It really helped to shop with her, especially for bulk diapers and wipes 🙂

    Instead of going out for entertainment, we had Tuesday movie night where we'd rent a movie from the video store. It was something to look forward to when all the days of the week seemed to blur together.

    Also, There is nothing wrong with hand me downs. Just because the baby is new doesn't mean all her things have to be .No need to spend extreme amounts of money on items that will be outgrown in mere months.

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