5 Strategies for Surviving on One Income
Are you really ready to give up that second paycheque? Staying home with the kids has many benefits, but in order to succeed, you’ll need a clear and focused financial plan. Follow these steps to make sure that you’re ready to face up to your decision.
Needs vs. Wants
Put together a detailed cash flow chart, tracking all money coming in and going out. Divide your expenses (what's going out) into "needs" (like rent or mortgage, utilities, transportation, etc.) and "wants" (vacation expenses, the occasional movie or dinner out, etc.).
What Can You Do Without?
Start by trying to eliminate or reduce items from the wants category. Could your family dispense with a tropical vacation and just go to the cottage, saving yourself some $5,000 a year? Could you do without a second car?
Reorganize the Needs
Take a look at your "needs." Could you cut back on mortgage payments by amortizing your house over a longer period of time? Or perhaps downsize to a smaller dwelling? Can you reduce utility payments by turning lights off and hanging clothes out on the line?
Test Out the Plan
Once you've come up with a plan you think you can live with, test the waters. A leave of absence offers the opportunity to try living on one salary, without giving up your job completely. If that option isn't available, at least try living on one salary for three months to a year, while you're working. Not only will it be good practice, but you'll be able to bank your savings as an emergency fund.