Living on one income can be a challenge. But it’s a common reality that many couples, at some point or another, will have to reckon with.
Your partner may have to take some time away from work to care for a loved one, or he or she may be let go from a job or need to take a leave of absence for health reasons.
Whatever the cause, adapting to life on one income is an adjustment. But it doesn’t have to result in total financial disaster.
Here are some tips to ensure that making the switch from two incomes to one is as smooth as possible for both of you.
1. Decide How Each of You Will Contribute
Figuring out who should leave work and who should bring home the bacon (if you have the option to choose), can lead to some deep discussions around your money and values.
Regardless of who ends up as the sole income earner, it’s important that each of you feel you are still contributing.
So consider ways in which the non-income earner can help with the financials of the household. Maybe it’s managing day-to-day expenses and optimizing costs.
Remember, big financial decisions should continue to be made in partnership.
When only one partner is generating an income, he or she may feel more entitled to spend it. Avoid that dynamic by adopting a shared approach to your money and developing a system that allows you to jointly manage the household earnings.
2. Test Before You Transition
If you’ve been living on two salaries for years, even with cutbacks, you’re still likely to face a challenging transition period.
So, before you absolutely have to make the switch from two incomes to one, give yourselves at least 60 days to test out your new strategy (if you can).
This test period will give you some valuable time to figure out which changes are realistic, and which might need alternative solutions.
Was meal planning your undoing? Did you not have money budgeted for emergencies? Should you find cheaper ways to dine out or cut entertainment costs? This trial period will give you plenty of chances to learn while your second income is still available as a safety net.
3. Track Your Expenses
If you’re not already using software or spreadsheets to track your expenses, this adjustment period is a perfect time to start.
Tools like Mint and Empower can securely download your credit card and bank data to show you exactly where your money is going each month – forcing you to confront the money habits and decisions that may be keeping you from making the transition from two incomes to one successfully.
4. Cut Costs Strategically and Creatively
Go through all of your expenses as a couple, and see which can be reduced quickly and easily.
Costs like entertainment and grocery bills are often the most inflated expense categories, where you can make big strides without too much of a sacrifice.
In addition to cutting back, challenge yourselves to renegotiate as many of your expenses as possible.
When was the last time you called your insurance or cable company to see if you’re still getting the best price? A quick phone call can lead to surprising results and instant savings.
While cutting costs can be stressful, it can also be fun if you approach it with the right mindset!
5. Communicate, Communicate, Communicate
Managing money successfully, much like everything else in a relationship, relies on communication.
Don’t wait for a problem to pop up or the stress of your new financial reality to boil over to start talking about your finances.
Make sure money – both what you want to do with it (as a couple) and how you’re managing it (as a couple) – is a frequent conversation.
More than anything else, openness, honesty and frequency of money talk is the key to financial success on one income.