Page 44 - Book3E

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3. Decide where you can cut back. Let's face it. When you’re earning less, you have to learn to spend less. Can you cut out some of the extras you’ve grown comfortable with on two incomes? What about cable TV, cell phone plans, weekend getaways, or entertainment? Perhaps your children are enrolled in costly activities that keep them busy while you’re at work. Are you willing to make sacrifices in unnecessary spending to adapt to your decrease in income? Indicate what you will realistically spend on extras in your spending plan.
Another good idea is to begin living off one income while you still have two incomes so you begin to internalize week in and week out what living on a single income really entails. Consider it a financial boot-camp for your family. Chances are you’ll discover that some challenging sacrifices are required, but the rewards may compensate for any discomfort.
4. Transition slowly and save as much of the second income as possible. While an unexpected job loss may force you to have to live on one income, most couples will want to ease into the transition gradually. One very wise way to enable your family to eventually live on one income is to save as much of the second income now and build up a nest egg or savings cushion that you can fall back on if needed once you make the break to the single-income life. Plus, doing so will help you see where you can cut back in your budget and give you a heads-up on the financial pressures to anticipate.
Two-income families that base their budget for essential monthly expenses on one income—or even one and a half of their combined earnings—are more likely to have enough money to cover difficult periods. Plus, not relying on that second income will allow you to enjoy that “extra” money when you have it and not miss it when you don’t.
Instead of spending two paychecks down to the last dime each month, stash away 5% of your combined income, then 10%, then 20% and so on until you can eventually put the entire net pay of one spouse in
Downsizing from Two Incomes to One