As many of our regular readers know, Mr. CMF and I adopted a sweet baby girl in summer 2014. This little miss has completely changed our lives since she was born, but, to be perfectly honest, she changed our lives quite a bit even before she was born as well.
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Mr. CMF and I have known for many years that we would like to have the option of having a stay-at-home parent when we had children. We think there are a lot of advantages and benefits of this, and so this became one of our financial goals when we first started talking about having kids- we at least wanted to have the option of being able to have a stay-at-home parent. And when we took a look at our finances, we knew that we would need to make some changes if we wanted to have that option.
So- how to do it? When we first started discussing this, I’ll admit we were a little scared about the possibility of only having one income rolling in every month.
How We Prepared For a Single Income
We decided to tackle this fear head-on! We did this in a variety of ways:
- We started pretending that we only had one income. We arranged it so that all of my paychecks were directly deposited straight into our savings account (since I was the one who was thinking of being a stay-at-home parent, and also because my income was quite a bit less than Mr. CMF’s at that point).
- Our monthly expenses could not go above what Mr. CMF would be bringing home in his paycheck- so we had to make cuts. We couponed. We sold things on eBay and Craigslist. Rather than replacing our crappy cars, we kept them and made do. We became a lot more frugal. If you need help in this area, check out Trim to help you analyze your bills and reduce your rates.
- We got off the credit card spending wagon! Prior to this, we had been the type to carry a balance sometimes. We foolishly considered the interest we were paying to be “not that much,” so we hadn’t been necessarily making a great effort to pay off the cards every month. But when we got serious about planning for a stay-at-home parent, we stopped that crap!
- We used Mr. CMF’s earnings alone to pay all of our bills. And, to keep it “real,” as we would want to do when we did finally have a stay-at-home parent, we also continued contributing to retirement accounts and put a small amount of Mr. CMF’s paycheck into savings every month as well.
- We stopped accumulating new debt. Once we paid off the credit cards that we had (small) balances on, we took a good hard look at the rest of our debt too. We paid off the smaller student loan that we had. The only debts that we did not annihilate at that point were our two federal student loans- since those were larger and were locked at 2.5% and 3.5%, respectively.
- We started up some side hustles. Just in case! We wanted to have some other potential income streams out there, since dropping my income would increase our risk if something were to happen to Mr. CMF or his job. I started this blog and did freelance copyediting and writing, and Mr. CMF started doing some freelancing as well.
The advantage of doing these things was huge. Not only did we start to accumulate a nice amount in our savings account, but this forced us to keep our cost of living in check. Also, the longer we went along happily living on only one paycheck, the more confident that we felt that we’d be able to do it when we became parents!
For us, once we finally got our financial act together and started saving, using free online resource Personal Capital (review here) really helped us to see where our money was going and establish a better budget, as well as better plan our retirement savings strategy. We didn’t find this great free resource until our 30s- wish we’d found it sooner!
And Then
And then it started to become apparent that we were not going to be able to have children as easily as we’d hoped. What had seemed like a “just around the corner” type thing started to seem like a dream that was further and further away.
Although we had completely not intended it when we started putting all of my paychecks into our savings account, suddenly that account became much more than our preparation for Single Income Land- it also became a means to get to that place called Parenthood.
Fast Forward
In total, we put all of my paychecks for nearly five years into our savings account. In addition to funding fertility treatments and later our adoption, we also pulled from that account to fund the down payments for both our current home and our rental property.
Don’t worry, I’m not suggesting that any of you considering making the switch to one income need to do this for five years before you take the leap! I never would have dreamed that we would have a five year “financial rehearsal” for parenthood. However, in our case it ended up being a blessing in disguise, since we needed that extra cash on our expensive road to parenthood.
What to Do
However, if you are considering dropping to a single income, I would recommend that you do as we did and “pretend” to have only one income for several months- or maybe even a year- before you actually do it. Since some expenses change throughout the year (or only occur intermittently, such as insurance premiums), it was nice to be able to experience all of the financial “seasons” before we took the leap to Single Income Land. Plus, you’ll appreciate having that extra cash in the bank (especially if you are a new parent!)
Also, having that “financial rehearsal” for at least several months is a great way to get an idea of whether you might need to tweak your budget or make further cuts to live on one income. It is definitely in your best interest to figure this one out before you actually drop an income- failure to do this could lead you straight into debt if you are not prepared!
Has anyone else out there considered or already made the change to a single income? If so, please let us know how you are preparing or have prepared in the comments!
Suggested Reading: One of my favorite books on single income living is Miserly Moms: Living on One Income in a Two-Income Economy
CMF’s favorite FREE money management tools!
Some of the best online tools out there for money management are at Personal Capital, and the awesome news is that they are all FREE! Cash flow tracker, 401(k) fee analyzer, investment checkup, net worth monitoring, and many more! I’m a net worth junkie, so the net worth monitor is my favorite. Check out my Personal Capital review here, or click here to check out all the awesome tools for yourself!
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Great job, guys. And you obviously know already that the sacrifice is worth it!
It is absolutely worth it 🙂
#3 is a killer. You see that you are paying $25 a month in interest and don’t think it’s a big deal but in the long run, it really is a lot of money.
My wife and used the same trick – living off of our one income when we both had full time jobs. It was great seeing our savings skyrocket every month. It takes a little work to survive off of one income but man is it worth it.
Your approach is great and I even like how you’ve added in some side hustles to help cover you in those months were money might be a little tight.
I know! Looking back, it’s hard to believe that we ever considered credit card interest to be negligible. Thank goodness we woke up!
I’m pretty much planning my life based on the assumption of a single income, regardless of wether or not I get married. I want to know I’m always as financially prepared as I can be.
What I love about that is that you already have it in your plan and are gearing your financial life toward that- if you ever decided to partner up or get married, any extra $$ between the two of you would be gravy.
We’re a single income family an dI agree with you: live off one income before you become parents. Becoming parents is pretty overwhelming, so having your budget sorted already is one less thing to worry about. Having your savings build up is a nice side benefit.
Exactly! It’s so helpful to have that kind of preparation. Glad you guys found that too!
This is exactly what we did when we started trying for a baby too! We pretended my income no longer existed and solely lived off my husband’s. Luckily, it worked and I was able to stay home. It’s always good to give those types of things a “trial” run before pulling the trigger.
Love it! Good for you Sarah!
You planned ahead, which is absolutely a great thing to have done! So many people seem to make knee-jerk, emotional decisions about such matters, but both of you thoughtfully prepared and got in position to live accordingly ahead of time.
You bring up such a good point- things like this can be very emotional decisions for a couple. It’s helpful to think about things like this in advance, before you’re in the thick of it.
I think that’s a great strategy to prepare for a one-income family. I think there are probably lots of people out there that would like to have a parent stay at home, but they just can’t fathom living off one paycheck. I’d go as far as to say it’s definitely do-able for most families.
I agree. Of course everyone’s financial situation varies, but if you are willing to make sacrifices and prioritize, I think this is something that can be done if you really want to. Plus, the financial costs of working as a parent (day care, commuting, etc) often outweigh any potential earnings anyway!
Honestly, we both should be able to live off of one income, not only his, but mine if need be. We have very few bills, and yet each month we still fail to do it. It’s a really hard thing to stick to and that is why we are working towards saving a certain amount each month and working towards that. All these suggestions are awesome and I’ll definitely be taking these into consideration in the coming months.
Another thing that’s really helped us is that we automatically send out our extra debt repayment and our allotted savings immediately after hubby gets paid. Since we do it first, it always gets done. Also, we know that means that we cannot spend more than what’s left after those two things go out.
Keep working at it, I think it takes a while to find your stride with things like this. For us, we did a lot of things wrong before we figured out how to do anything right. If it’s something you really want and you put your mind to it, I know you can get there 🙂
We’ve basically changed to a single income when I became a stay at home dad. It was quite a shock to the system even though we prepared for it in advance. I’m working to change that though by starting to generate money through my blogging and freelance writing.
That’s so cool. Do you think you’ll be able to surpass the amount you had been making at your teaching job with your income from blogging and writing? THAT would be the dream, right?
You guys did what you needed to do to achieve your dreams, and as others have said, it’s always well worth the trip. Great job, my friend!
Thanks Laurie! I think things often work out the way they are supposed to 🙂
Wow, I didn’t realize that it took 5 years to make that whole process happen for you. I’m glad that it finally worked out. I’m also guessing that after living the single income lifestyle that you probably wouldn’t even want to go back to some of your old habits if you wanted. Why would you not want to pay down all your credit card debt? Also once you start saving large amounts of your income, in your case a whole pay check, would you ever go back to saving the “standard 10%” or so? I know that I couldn’t do that, I think that at first when you cut down on spending you might miss some random things (cable, new cars, fancy gadgets) but after a while you get used to not having those things and you wonder if they *really* improved your happiness in life at all.
At this point we’ve been living off just my hubby’s income for so long that we barely noticed last summer when I quit my job and decided to be a stay-at-home mommy for a while. We don’t have money piling up in the savings account as fast now, but we certainly have enough saved for emergencies, etc. You’re right, I think we’ll likely always be aggressive savers at this point- it’s such a habit now.
I totally agree with you about vices like cable and cars- we don’t miss cable at all, and I’m convinced that, when we did have it, it contributed very little to our level of happiness!!
Great job. Not just a single income, but you went to another mouth to feed. And babies are expensive (and messy…)
I really hear you on the expensive and messy! But totally worth it 🙂
Sounds like you thought through it quite a bit and prepared so you wouldn’t be shocked by changes in your income after the adoption. Great job!
Thanks Kayla! There was definitely a lot of thought that went into it- although we never could have guessed exactly how many years it would take to make that dream come true!
It’s pretty incredible that you were able to save your income for 5 years! Talk about “testing” the waters. That’s seriously impressive. I think others should take a similar approach where they attempt to live off of one income for an extended period of time before they take the plunge and become a one-income family.
After a while we just got used to living on less! And we kind of got addicted to saving money- I think that once you get used to saving a high percentage of your income, it just becomes the norm. It did for us, anyway.
I agree completely with your advice to ‘pretend’ that you have one income so that you can make the necessary adjustments to your lifestyle.
I think it also makes sense to ‘pretend’ that you income is lower than it actually is when you ‘pay yourself first’; say by contributing to a retirement fund or a DRIP, etc. When you create a new ‘normal’ it eventually becomes just the ‘normal’ and you don’t miss what you no longer see. Meanwhile, these funds are being diverted to achieve your other financial goals.
I love what you said about creating a new ‘normal’- that’s exactly what we did when we were preparing for a single income, and it is what we continue to do every month when we pay ourselves first. At this point we are so used to living on a small percentage of our income that it would feel really odd and uncomfortable to go back to NOT saving that much.
Thanks for your ideas and everyone’s comments. Just yesterday my husband and I were discussing when I’d be able to retire. He already is and and I have 5 years before I’ll be able to start drawing on my small retirement. We decided to bank my check and live off his retirement to adjust to a more frugal lifestyle and build up our savings for when I retire. The ideas here are a great start for us.
That sounds like a great idea! If you save all your paychecks for your last five working years that should add a substantial amount to your savings as well! Then you will feel extra confident when it’s your turn to retire. 🙂
Being divorced, I became a single income with 3 children 16 years ago. It wasn’t too difficult because my ex-husband hardly earned any money (hence the divorce), and I had become frugal out of necessity. Now frugality and minimalism are by choice, not necessity. So, we (my kids and I) had a single income most of their lives, but not the benefit of a stay at home parent.
I am blessed that I have 3 grown daughters now, and we are all close friends, too! They saw and appreciated the sacrifices I made to give them what they needed (and saw how little-to-nothing their father contributed, but saw their friends’ fathers providing for their families). I hope if they get married they all choose more wisely than I did!
Lots of reasons to consider being prepared for a single income. Thanks for stopping by!
This was a really interesting read for me, as my husband and I are planning for me to stay home when we have children in (hopefully) the next year or two.
When we bought our house, we put down enough money so that our mortgage and taxes could be paid with just one of our salaries alone, God fordbid anything ever happened to one of us or one of our jobs. At the time, we were both making around $50k. Fast forward a few years and my husband is not making more than double that and I am making a and one and a half times that (give or take a little).
Our intention in waiting another year or so to grow our family is that we will be able to afford a comfortable lifestyle just on his income alone (and, of course, making more money off my blog would be nice, too!). This is really all we have done to prepare, thus far; however, we also intend to cut back on a lot of things. Right now because we both work full-time jobs in accounting, we have a dog walker while we’re at work, a cleaning lady that comes twice a month and a small car payment on an SUV I just purchase last year. We will payoff the SUV in the next few months, I will be home to walk the dog and I will also clean the house. We will also be going out less often and I will be driving less often since I will no longer have a 30 mile commute to work at that point.
Wow, it’s excellent that you have put forth so much time and effort into planning this. I think it’s the planning part that derails many peoples’ dream of (happily) having a parent stay at home. It sounds like you are well on your way to making it a reality. Thanks so much for stopping by!