Are you a dual income family, but wish that one of you could stay at home with your kids instead?
My husband and I were a lot like you, as we were expecting our second baby in June of 2013. We had interviewed numerous daycares for our two children and even tried out an in-home nanny that unfortunately didn't work out. Having wonderful care for our two children (both under two at the time) was our utmost priority. Even though I was a financial advisor, I never thought it was possible for one of us to fill that role - until I did the math.
I guess if you want something bad enough, you can get creative and figure out how to make it happen. That's exactly what we did. We went through our budget line by line and got aggressive by making the necessary cuts to reduce our expenses as much as possible. We'd already cut things like cable t.v. and gym memberships in the past, so we needed to find new ways to decrease our expenses.
Living Off One Income
Making the necessary cuts (and not having to pay for expensive daycare for two) enabled us to make the decision for my husband to quit his job just as I returned to work after a six-week maternity leave. He'd always expressed interest in being a SAHD and at the time there was more opportunity in my career future. So we secured our own health insurance (I'm self-employed) and took the leap. It's been a great transition so far. We now have a three year old and an 18 month old, and although I'm sure it makes for some long days for the hubs, we both agree it's been so worth it! And to think when we started our family, it never even crossed our minds as a possibility.
If you're in a similar situation to us or are just starting to plan your family, here are five tips to do the same.
1. Practice Living Off One Income
Start practicing living off of one income before you take the plunge and one of you quits your job. As a financial advisor, I would commonly give this same advice to clients that were thinking about retiring. Put a budget in place (if you don't have one) and practice living off of your new income amount before you actually have to. Likely this amount is less than your current income, so use the different to save or pay down debt. This way if you can't make ends meet on the one income, you'll know before it's too late!
2. Cut Expenses
This one is pretty self-explanatory. After putting a budget in place (if you don't have one), get creative to see where else you can cut. Start with the more obvious ones and then brainstorm some alternative ways if you still need to.
3. Pay Down Debt
Paying down or off any debts that you can is a great way to prepare for going down to one income. This is obviously one that you want to get as much of a head start on as possible. Basically the less you have in the way of liabilities, the lower your monthly obligated expenses. We're fortunate that we started this process long before we started to have children. We had paid off our student loans, auto notes and any credit card balances we had. This really helped to give us peace of mind as we prepared for Wade to put in his notice.
4. Save a Bunch of Money
Cash is king! This is even more important than paying down debt, but both are extremely helpful. The average family should have 3-6 months worth of expenses (not income) set aside in cash reserves. If you're preparing to make a big change, I'd suggest saving up as much as humanely possible. The last thing you want to have happen, is to quit your job and then have to look for a new one and a new daycare, because you can't make ends meet or had a bunch of unexpected expenses come up!
5. Have a Contingency Plan
What if you do have a series of emergencies or unexpected expenses come up and you deplete your cash reserves? What do you do then? My husband and I have always talked about and planned for the "what if" scenarios. We've also tried to take advantage of extra income sources when they arose. He'll go work with his dad doing construction one weekend a month and I've started freelancing on the side. This helps us to set some money aside or to pay for fun things every once in awhile.
Stay the Course
Living off of one income can be a big change. Cutting expenses - especially the fun ones can be painful at times. To us it's 100% worth it, so one of us can be at home raising our kids. There's absolutely nothing wrong with daycare by the way, we've had some wonderful care providers in our past. It's just not what was ideal for us, if we could find another way! We're so thankful that we could make the transition to a single income household and that we have more one on one time with our kiddos.
Are you a dual income or single income family? Tell us why it does or doesn't work for you in the comments below!