Going Single-Income: Help a Reader Make the Decision
Matthew found my article “Can we be a single-income household” and asked the following question:
Mike,
I read your article about becoming a single income household and I have a question. My wife and I recently had our second child and she just returned from her maternity leave to her job as a Jr. High Biology Teacher. After her first week, she has asked if we can afford for her to not go back next year. I really want to say yes, but I am worried we will be financially strapped. Do you have any suggestions for me to earn additional income so she won’t have to go back, or some ideas for a home job she can earn a salary with, but still be with the kids? Any advice would be great, thanks!
I’ll give the usual disclaimer that I don’t know anything about your financial stability, budget or future, and I’m not a certified financial anything, Now with that said, I guess we have three main issues here:
- Can you survive on just a single income?
- Even more important, can you continue to save/invest/pay-off debt at an increasing rate or will your finances stagnate?
- How can you find additional income without your wife leaving the house?
Here are my responses to each:
- First, find out what you can support. You need to sum up every one of your recurring (fixed) expenses, plus expected (worst-case) variable expenses to find out your minimum income requirements each month. Fixed includes mortgage/rent, subscriptions, and any other regularly occuring, fixed-rate bill. For variable expenses, I consider anything that may come in that month, may not come in, and if it does, it might be slightly or drastically different than the last bill. For many of us, utilities fall into this category (especially gas and electricity). Oh and don’t forget your budget for food, gasoline, and anything else you regularly spend money on each month.Now that you know what your minimum cash needs are each month, then you know how much wiggle room you have for emergencies, vacations, or any other planned and unplanned expenses. You really don’t want to be too close to that break-point, but only you can tell what that point is based on your history.
- So in #1, you found out your minimum financial needs, but now you need to look to the future. Usually the first things to go when times are tough are retirement and savings account contributions. However, you need to ensure you have money for the short- and long-term future needs like emergencies, retirement, your children’s educations (if you choose to fund them) and even taking care of elderly parents. Don’t forget saving for Christmas, anniversary and birthday gifts because you don’t want to leave the holiday with more debt than you entered with. I advise that you add future-oriented items to your budget and stick to it. Thus, by also counting how much you’re saving in with what you’re spending each month, you get the complete picture on your financial status and needs.
- Lastly, you want to know about other income sources. Well, I could easily say start a blog like me, but you probably won’t see much income for at least 6 months, and I assure you it’s no easy job to put one together and contribute on a regular schedule! But your wife clearly has a marketable skill that can be accomplished at your home: Tutoring.I don’t know what your wife’s credentials are, but I can assure you that tutoring is a big deal and can command $50-100 per session (or more even, depending on the area and the subject) and keep her fairly busy once she gets things going. But she shouldn’t limit herself to just the school she currently teaches at; branch out to all the regional schools and increase your client-base substantially.
So overall, only you can decide whether you’re ready to change to one income, but I suggest looking at each of your skills and interests and determine how you can best utilize and market them to earn additional income.
Fellow readers, what are your ideas? Have you been successful in a similar situation? How did you manage the switch to a single income? Also, feel free to contact me with your own stories and I’ll post them (with your permission) to share with everyone else!
I’d also ask him to consider childcare costs and other expenses that would go away if his wife left the workforce.
I don’t know if this pays well or if it would be annoying to do since she would have to arrange childcare for the day, but maybe substitute teaching as an additional income option would work.
You know the best way to see if they could survive on one income is to try it for the remainder of her school year. Save her entire salary, then if you can make it on what you earn – great. Plus then you will have built up a nice emergency fund by saving her salary.
I totally agree with #3! She could easily match her salary with tutoring. Probably couldn’t replace the value of any benefits, but one has to assume that’s covered by the husband. Tutors in Science are a priceless commodity, especially one with experience in the local school district. I’m surprised they hadn’t thought of this!
I also second other commentors: look at the cost of childcare, work related expenses, vs being a SAHM.
If they are dependent on her benefits its a completely different ballgame.
Like you metioned, I think it’s really hard to determine without money figures but if I was in their shoes, I would want to make sure that I felt secure with one income. If I’m going to worry about it AT ALL, I wouldn’t do it.
The thought of just worrying about money is bothersome. On the other hand, I really like the idea of doing your own thing like tutoring. Im a true believer you can turn any hobby/profession into a very profitable side business. It just takes dedication and motivation!
Tutoring for a former teacher is the way to go especially if your local school district has standardized tests that a student has to take. I would not recommend subbing as it really pays a fraction of what a full time teacher would get. Plus, you’d lose the whole day and you may not even make up enough in child care costs. Tutoring offers the most flexibility and the most pay hands down. She may even want to look for some opportunities such as grading tests or essays for after school study programs. And her plus is that she is a science teacher. I think her services would be high in demand.
We did this and financially it obviously means cutting back quite a bit. I think the question you have to ask is if it’s worth it for both spouses?
If the non-working spouse isn’t going to use their time wisely then it might not be a worthwhile move.
Mike
We made this move about ten years ago before our first child was born. It was a tough lesson for us, because we did not adequately prepare for the drop in income. What you have laid out is a thoughtful approach, and one that should lead to an informed decision. Wish I had read something like this 10 years ago!
I’m going to be quitting my f/t day job when I have our second child, and take a night and weekend job at a retail chain such as Target. To me, this seems like the best option because paying for daycare for a second child is going to seriously strain our budget. Plus, I think it’s going to be better for the kids to get to stay home with Mom instead of always having to rush out the door to daycare. Although it’ll seem like a lot to do being a SAHM during the day and then off to work in the evening while husband watches the kids, it’s the best solution. Plus, it’s not forever and it will be a good opportunity for me to explore other job options. I think a lot of it depends on how much you love your job too.
My wife and I are somewhere near this point as well. We’re looking at ways that we could possibly survive on one income, but we’re struggling with the fact that my wife’s income would be the only one that we could afford to lose right now. It doesn’t offer us the flexibility that we’re looking for right now, but we’re planning on going through this exercise a little more to see what our options are.
I would say try it out now, live on his salary and sock away hers, just to test it out