There are many reasons you might consider a lifestyle change that means moving from two incomes to one. Maybe you or your partner wants to go back to school. Or pursue a passion project. Or spend more time at home with your kids.
If you’re considering going to one income, take a few months to try it out. Get used to your new budget.Capital One
No matter the reason, one of the benefits of moving to a single income by choice is that you have time to plan and prepare. As you weigh the pros and cons of taking this big step, here are a few things to try before making the decision.
Create a Leaner Budget
When it comes to reworking your budget, you’ll probably want to eliminate some spending. The three biggest ticket items are housing, transportation and food.
Here are a few strategic ways to slim down your budget:
- Explore refinancing options for your home
- Downsize to a smaller house with cheaper utilities
- Trade in your vehicle for something more affordable
- Prepare more meals at home and eat out less
There are a lot of little ways to re-evaluate spending around your house, such as taking a look at cable packages and phone plans. With rising TV costs and new alternatives, watching TV can get expensive. Consider downsizing your cable package or cutting the cord completely. The same goes for home phones. If the majority of your phone time is spent on your cell, you might not need that landline after all.
Practice Having One Income
If you’re considering going to one income, take a few months to try it out. Get used to your new budget. During this trial run, spend only what you’ll make with one income and put everything else into savings. It could help you save a good chunk of change before the actual switch. And if you have debt, you can use some of that savings to pay it off before you move to one income.
Re-evaluate Your Retirement Savings Plan
When it comes to retirement, consider increasing contributions to ensure you’re saving as much as possible. Do your research or talk with a financial advisor about options that can help you maximize growth and provide you with the most financial security.
Talk to a Tax Advisor
A lower household income could mean that you’ll fall into a new tax bracket. If that’s the case, you might want to change the amounts withheld from your paycheck each month. You can check with a tax professional or the IRS to see whether your withholdings need to be adjusted.
Get a Side Gig
Temporary or part-time jobs can give your family extra cash, whether it’s for spending, debt payments or savings. Work-from-home jobs allow you the freedom to stay at home with the kids and earn extra income. Do you have a passion project that could be monetized? That might be another way to make up for some of the income you’ll be losing.
Side jobs can also help you network with like-minded people—just like the office. Even if it’s not for extra cash, you can get involved in the community and stay active with learning opportunities or initiatives you’re passionate about.
Staying in the Workforce
Even if you decide not to leave your job, for whatever reason, living off of one salary is a great way to create a cushion for you and your family. This way, you get to keep your benefits, like retirement and insurance, but you’ll be tucking away one entire salary into savings.
All About Teamwork
Try to set goals and follow them as a family. You and your partner will be each other’s support system. Create a higher level of commitment to your new budget.
And don’t forget the possible benefits of this decision. Getting to spend more time at home with your kids. Going back to school for a new career. Maybe even getting a more flexible schedule working from home. Remind yourself why you want to make the switch. Going from two incomes to one is a big decision, but it could be the right move for you and your family.
This article is for educational purposes only, and is not intended to provide medical or legal advice, or to indicate the availability or suitability of any product or service for your unique circumstances.
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