Matthew found my article “Can we be a single-income household” and asked the following question:
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!