As I told you yesterday we’re moving from a two income family to one income. This will take some adjusting on our part. If you’re considering moving from two incomes to one you should check out 9 Tips For Going To One Income from PT Money.
Among the things we have done so far to adjust:
- Changed my 401(k) contributions – I was contributing more than the company match for my 401(k). I’ve now lowered it to the company match. Anything lower than the company match and I would be missing out on free money.
- Roth IRA contributions – We lowered our monthly contribution to our Roth IRA’s. Yes it’s important to save for retirement but for right now we need to make sure we can handle our new budget constraints. If we find we have enough left over we’ll up the amount.
- 529 Plans – Again, it’s important that our kids are able to go to college but having money now is more important. We didn’t eliminate contributions, just lowered them.
- Tax Withholding – With my wife not working I plan to change my tax withholding so I can keep more of my paycheck. We’re waiting to hear back from our accountant for advice on what we should set my withholding for.
- Health Care – Our health care was through my wife’s job. I’ll have to switch it over to my company’s once my wife’s coverage officially ends. This will cost us as my wife had free coverage and I don’t. We had to keep this in mind when we worked out our budget.
- Look for ways to trim expenses – The Starbucks days are coming to an end. And now when we go to Target or BJ’s we’ll go in with a set list of things we need and not buy things we want.
- Work on finding alternate sources of income – We’re keeping an eye out to see if there are any ways to earn some extra money. I’d love to say this site would help support us but blogging isn’t as lucrative as some make it out to be.
- Go through all of our monthly bills/expenses – We made sure to see where our money was going monthly. We didn’t want to build a budget then find out we skipped something that would make us go over. Make sure you check for any automatic contributions or payments you may have set up!
This will be a big adjustment for us but it will be worth it. We’ve saved and planned and budgeted and I think we’ll be fine. A little tighter than we used to be but fine.
Do you have any other ideas?
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photo credit: Jeff Belmonte
Good for you. It must be a tough change to make but it sounds like you are doing all you can to make it work.
Do I ever know what you mean, we went to a one family income over a year ago. Our income was cut in half, but our spending did not stop. I’ve now realized that we are in deep trouble. Lucky I’m old enough to draw social security but that is not enough so I’m going to look for something part time also.
That sounds like the exact same steps we took two years ago as we prepared to go to a single income. I’m so glad we did it and you will be, too!
We took almost identical steps when we went to one income just over a year ago.
One thing we did, that you didn’t mention, is to raise our insurance deductibles on our vehicles. Yes, it’s a risk if we’re in an accident, but you do tend to drive more cautiously. 🙂 You could also check with your insurance company about reduced rates for driving less (since your spouse will be home more instead of commuting to work).
We also eat out a lot less because I’m home to make meals.
I also treat it as my “job” to find deals and stretch our money. I’m able to hunt down great deals on groceries, personal care items, clothes, gifts, and more because I have more time to do that!
We went to one income because of the illness of our first child. I decided to stay home. When our second son was born, it wasn’t even a question, I am home. Period. For all the reasons you listed.
Anyway, one tip we used when building our budget was this: it was gifts that got us. Not the gifts you can totally cut out (little things you pick up for friends, birthdays of friends you really dont’ know, etc.) but family, christmas. We would be doing fine, then *boom*, we get to a holiday or birthday. Even cutting way back on spending still cost us. So we built a small amount into our monthly budget for christmas. It goes right into savings. Then when November rolls around, we have a small pot of money to christmas shop with, and we don’t break our budget for that month. Or wind up paying it back the next month (thus breaking January’s budget).
Also: shop for groceries once a week. Period. If you need it more than that, you don’t get it. When you go in daily, or multiple times in a week, you ALWAYS pick up things you don’t need, and spend WAAAAY more.
Before you start stocking up on Basics (pantry items, laundry soap, etc), watch the circulars for awhile to find out what the sales do in your area. In ours, things go on sale in sort of a cycle, so every few weeks something new is on sale. That way, if you need something, sometimes you can wait a week or so if you know it will go on sale and stock up. cupons don’t work for us, we don’t eat a lot of the pre-packaged stuff that cupons are good for, and we have good store brands that are almost always less than the cupon price. And we go to a wholesaler, again cutting costs. But every area is different.
Welcome to the Simple life, FFB ! 🙂
My wife and I have lived on a single income for 5 years now. It takes A LOT of adjusting, but it also forces you to simplify your life and appreciate the little things a lot more. It’s not easy, and you have to make many sacrifices, but there are many benefits as well. Especially if you have young children. We spend much more time with our kids, playing games than we would if we both worked. Firstly, we wouldn’t see them as much, but we’d also be more apt to lavish the extra income on them and probably spoil them.
Good tips. I often wonder if my wife and I will ever be able to do this. I am especially interested in the W-4 issue, I would like to optimize ours a little more.
Nice post! This is something we’re actually looking at possibly next year. We may be having our first child and we want my wife to have the option of staying home. We may be actually downsizing our home to help accommodate our financial needs.
Thanks!
-HIB
We’ve been living on one income for 12 years – and it is soo worth it! Sounds like you’re doing all the right things. When we first started cutting the grocery budget became my number one goal – and our number one money saver. Start a price book. There’s no substitution to knowing what a good price is for everything! That’s when the real savings are possible. Good luck!
@ Nicole – It will be tough to adjust to the new budget but I think we can do it.
@ MeLu – We realized that a lot of our spending habits would have to be curbed, I’m talking to you Starbucks. We’re also looking into part-time options as well for extra income. Good luck in tackling your expenses!
@ Caveman – Always great to hear from others that have made it work!
@ Christina – Good advice about the deductibles. We already have our auto deductible at $1000. I’m not too comfortable raising it any higher. But if it were lower it would certainly be something we would raise!
@ Kym – Great grocery tips! As for gifts we tend to not go overboard as it is but maybe we should start to budget a little in just in case.
@ Joe – Interesting point on spoiling the kids. We’d much rather spoil them with our time and involvement than with stuff. And one income really does make you appreciate smaller things!
@ SeeMyMoney – The W-4 form has a calculator attached to figure out hwta you should with hold. I’m sure there are calculators online too. We shot an email to our accountant and he gave us a guide with an option to come in in a couple of months to take a look. It’s important to adjust this correctly since this is money we need right now not next year when we file our taxes!
@ HIB – Now is the time to start socking money away and to start adjusting your budget to one income. As you start to trim the extra money can go into savings! If you can get yourself to one income now then you can save the other income entirely!!
@ Jennifer – Price book, great idea!! We’ve actually started saving our receipts so we can get a clear idea of what certain items cost. It’s great to hear one income has worked for you!
We had to do most of these as well when we cut back to one income. Of course, I just look at it as setting the right priorities.
@ Jeff – That’s really what it came down to for us. The priority was raising the kids.
You can save tons of money by shopping for many needed items for children at garage sales, consignment stores, and resale shops. Children outgrow their clothing and “stuff” so fast that it helps if someone else paid the full retail price instead of you. On children’s equipment, check for safety recalls on high chairs, etc. before you buy. Check over gently used items carefully with an eagle eye. Some items you may prefer to buy new, but you can save on all the other items! Of course, clean and sanitize whatever you buy – you need to do that with your own children’s things, too!
As a corollary to my previous post, when your children outgrow their things: have a yard sale, or take items to the consignment shop. You’ll make a little money to buy items in their new size – and remember to buy gently used items to save on the full retail price the second time around too!
Join – or set up -a free baby sitting co-op in your area. Usually parents in the same neighborhood join together. All the parents might also go to the same church or be in other group together. You basically are trading baby-sitting time. Different groups set up slightly different rules, but essentially you “bank” some hours each time you babysit for someone else’s child. Then when you are ready to go out to dinner or a movie, you “spend” some of your banked hours. There’s usually a monthly “book keeper” who registers the hours that go in the book as earned and that are subtracted from the book as used. Each member has their own page where their hours are tracked. Essentially you are often earning hours while your own child or children have a play date with their friends at your home! You can start up a group with people you know who have children around the ages of your own. It also provides the stay at home parent a way to have some time to run errands every once in a while without the children. It’s fun, easy, and free! Give it a try!
Seasonal children’s consignment sales are another way to either buy or sell children’s clothing, books, equipment, and toys. Sometimes churches have seasonal sales a couple of times a year: usually around the time school starts and then again in spring. It is essentially a two or 3 day temporary re-sale shop. People register, are assignned a number, and price and tag their items to sell. The host organization (like a church, mother’s day out program, or a private seller), provides the location, the tables, and clothing racks, and the personnel. They sell the items and collect the money. Sometimes things are half off on the second day of the sale. You collect any of your unsold items at the end of the last day or usually they will donate them to charity. The host keeps a percentage of the money and the consigner is mailed a check. Of course you can also buy items from other sellers as you are selling your unwanted items. Always check over gently used items carefully and check online for any product recalls on equipment before you buy! Good luck!
Clip coupons for items you need and use. Don’t be hesitant to try a new brand or variety if you have a coupon for it. Try to find grocery stores that double and maybe even sometimes triple coupons.
Sign up for grocery story loyalty cards. When you present your card at checkout, you qualify for special offers (like Buy 1, Get 1 Free items) and a reduction in merchandise prices. Sometimes you can qualify for sweepstakes giveaways through your purchases too!
Sign up for grocery store’s e-mail newsletter programs. That week’s sales and special offers are sent to you by e-mail. Information on special promotions and sweepstakes for e-mail newsletter members only and special large value printable coupons are often included.
If it is a “good coupon week” in the Sunday newspapers, buy some extra copies, and start clipping. One local store here sells Sunday newspaper for 75 cents (while they last) starting Monday. Last week I bought 10 extra copies because the coupons were fabulous! I’m still clipping while I watch TV in the evenings.
Many retail establishment and restaurants have special birthday offers for children and/or adults. Do a search for birthday club online. Register at the different sites and shortly before your birthday, you’ll receive postcards or e-mail certificates you can print for anything from a free ice cream cone to a free restaurant meal. Some of these type offers are only for children and some are for adults only. Celebrate – in a “free” fashion – around your birthday!
Buy local “coupon books” that usually sell for about $25. Often schools and other non-profit groups sell those for fundraisers. Those coupon books are full of sometimes free or Buy 1 Get 1 Free coupons for anything from restaurant meals, $10 off oil changes, entertainment, $5. off groceries, etc. You can recoup your purchase price by using a couple of the coupons and then you have a year to use the rest of the thick book of coupons. I like to keep a runing total in the back of the book to show how much I have saved!
Keep on the lookout for free entertainment. In the newspaper today there was an announcement for a free concert later this week by a touring Air Force band. Tickets are free and available at a local grocery store and at the auditorium box office. In previous years we have attend at least 1 of these concerts. They are of high quality, very professional, entertaining , and free!
Think “old-fashioned entertainment” for frugal fun. What did people do for fun before everyone seemed to be plugged into computers and video games 24/7? Think: reading together, singalongs, board games, walks outside, a picnic in the local park, card games like Crazy 8’s, doing chores like washing the car, crafts from recycled items you already have, cooking together, planting seeds, volunteer work, gardening, nature walks, bird watching, free programs at the library, etc. We need to get over the idea that we have to “spend money” to have a good time or that we have to buy “the latest and the greatest popular items” for our children. They will mostly remember what you did with them, not the latest junky toy you bought them that’s forgotten in 6 months. Wht they want is your time and attention and love.
I don’t know if I could ever cut Starbucks out of my budget 🙂 The ‘alternate ways of income’ are definitely a winning strategy though.