Transitioning from a dual income household to a single income one isn’t one of the easier changes you can make in your life. This is especially true if your lifestyle has been built on having two incomes. But there are ways to ease the transition to a single income household, if you implement them before the second income is abandoned.
Build up your savings
Savings aren’t as much of an issue when you have two incomes. If one spouse is short this month, the other can usually cover the difference. When you only have a single income for an entire household, you’ll need to have savings to get by whenever there is a shortfall.
Save up money before the would be stay-at-home spouse quits his or her job. You should have an amount of savings equivalent to at least six months of living expenses. This should cover significant emergencies, as well as provide a cushion in the event that the sole wage earner loses his or her job.
Pay down or payoff your debt
There’s no getting around the fact that transitioning from a dual income household to a single one will require reducing your living expenses. The best and most permanent way to do this is by eliminating debt.
Paying off all of your non-housing debt would be ideal. But failing that, the next best step is to payoff your largest debts, particularly those with the highest monthly payment. Car loans are a natural choice. You can usually cut your living expenses by several hundred dollars per month by paying off a single car loan. If you have two, the impact will be even greater.
Eliminate any unnecessary expenses
Beyond paying off debt, you should also look to eliminate any unnecessary expenses. This can include unused memberships, landline telephones, and even cable TV if necessary.
You should also develop a more conservative budget. That may involve learning to conserve energy usage, permanently reduce grocery bills, and of course, cut way back on vacations and entertainment expenses.
Keep your housing costs to an absolute minimum
The changes we discussed so far can be implemented without making radical changes – but this one is an exception. You may find that the only way that you can lower your living expenses significantly is by lowering your housing costs. That can mean selling your current home in favor of a smaller one.
Most people are very reluctant to do this, not the least of which because it will mean completely uprooting. But transitioning to a single income household will be no less radical, and it can require a radical effort in some cases.
It’s not just that housing is typically the largest single expense in the average household, but also that it affects so many other expenses. For example, the size and cost of your home will have a material effect on how much you pay for property taxes, insurance, and of course, utilities.
Downsizing your home could be the strategic move that enables you to transition into a single income status with the least amount of effort and sacrifice in other areas. It will also represent a permanent reduction in your cost of living – and that’s the whole point.
The stay-at-home spouse can start a home based business
Still another option is for the the stay-at-home spouse to develop a home based business. Though that spouse may not be able to work outside the home, he or she may be able to create and maintain a home business, that will help with household cash flow.
This doesn’t have to be a full-time effort or a full-time income. A part-time venture, bringing in just a few hundred dollars per month, can cover a lot of expenses and lessens the financial pressure that a single income household might face.
You may find a just one or two of these strategies will enable you to make the transition. Or you can add as many as you need to to make it happen. Just how far you’ll need to go will depend upon your own personal circumstances. And if you’re looking to transition to a single income status in order to raise your children with a stay-at-home parent, it will be one of the best lifestyle changes you’ll ever make.