Certain major life events, such as welcoming a new baby or one spouse going back to school, create the desire for a couple to live on one income instead of two. The ensuing change in lifestyle caused by less money coming in can be dramatic. It will take a bit of belt-tightening and some careful planning to make the transition as painless as possible. You might even be surprised at how much money you can save off the top by eliminating one person's work-related expenses, including parking fees, lunches out and dry cleaning.
Don't wait until the moment when one of you actually gives up the income to modify your lifestyle. Careful planning can make things much easier when the time comes. Build an emergency fund to have the cash on hand to offset the income reduction if a worst-case scenario occurs. Putting extra money aside in advance also gives you the time to practice living with less money coming in before you actually need to do it.
Create a Budget
With two incomes, you may have been able to get by without a budget. To go down to one income, you need to identify areas where you can cut your spending. The process of preparing a budget forces you to take a hard look at how you've been spending your money. You and your significant other can then work together to decide what expenses you can live without going forward. For the items you think you must keep, explore substituting them with less expensive alternatives.
Sell a Vehicle
If one person is staying at home to care for a child instead of commuting to work, consider selling a vehicle. Although one less vehicle can be an inconvenience, the influx of cash or repayment of the loan could help your financial situation. You'll save money each month on car insurance, gasoline and vehicle maintenance. Also explore selling those "toys," such as motorcycles, boats and ATVs, as you will probably have less time to enjoy them. If you decide to keep the second vehicle but won't be driving it as much, ask your insurance agent if you qualify for a lower rate.
If you have long-dormant skills that could be useful around the house, now is the time to take them out of mothballs. Use your cooking skills to prepare budget-friendly meals instead of relying on takeout. Resurrect your mechanical expertise and save money by performing your own home and vehicle repairs. In general, take a look at any service you have grown used to paying for to determine if you are capable of doing it yourself.
- Dynamic Graphics/Creatas/Getty Images