Expanding Your Family and Reducing Your Income
Shawn, a subscriber and frequent commenter here at Clever Dude, as well as a personal friend of the Clever Dude and Dudette will be posting occasional guest articles. You can read his introduction here.
My wife and I are less than 10 days away from the birth of our first child. As a result, we’ve had first hand experiences with a lot of the concepts that the Clever Dude has discussed on this site.
The first arises because my wife and I thought it would be best if she stayed home for a year or so. This means we’ll be heading down to one salary.
One of the most important things we needed to do as a couple to make this adjustment was to sit down and discuss our new financial goals. We’ve had a debt-free plan that was contingent on a 2 person family with 2 incomes. Adding a third and losing an income obviously has an affect on our goals.
Planning Ahead and Adjusting Goals
The good news is that we had these discussions before we decided to start a family. We had to make sure that we were OK with adjusting our goals.
In order to readjust our goals, we needed another principle discussed on this site — a budget. We used my current salary as our basis for the budget (that is, we didn’t try to estimate what my salary would be given a lower tax rate, etc).
Even with another mouth to feed and less take-home pay, we’re still able to get out of debt in the near future while still continuing to build savings and retirement. However, our debt-free date moves from 30 months to 45 months.
We only spent about an hour coming up with our new plan. The reason we were able to do it in such a relatively short time stems from another principle stressed on this site — communication. We already had a set of goals, and we both wanted to adjust to our new life while staying as close as possible to those goals. By constantly talking with each other about our expectations, we’re able to stay on the same page.
Those of you with families, how did you decide if one of you would stay home or if both would return to work? What was your decision process? Were you willing to compromise on any of your financial goals in order to have one of you stay at home?