But it doesn’t have to be painful! You really can live richly and raise your baby on one income. Our spend-more society may disapprove, but your baby will have an advantage over many of his peers by growing up in a house where his parents don’t worry constantly about overspending and mounting debt.
Look Before You Leap
As far in advance as you can, test drive your ability to live well - not below the poverty line, no hand-outs from others, no resentful thoughts about your inability to afford pedicures - on your intended income. Figures on paper will give you a vague idea of whether it’s possible, but it’s different to actually live that way for a few months. And be sure your test is as true to life as possible.
For example:
- Factor in increased utility usage if one of you will be home during the day.
- Take out work-related costs such as clothing allowance or dry cleaning, pricey lunches out, and gas usage.
- Make sure you know how your taxes will be different. For most people, living on less money will actually improve their tax situation, but the only way to know for sure is to do a return using the new numbers. (Not fun, but necessary!)
- Will you have to pay more for you and/or your child to get health insurance through your husband’s job when you lose your own coverage at work?
- Figure out how much you’ll save on house-related tasks that you’ll now do yourself: making dinner every night instead of take-out a few nights a week and doing your own house cleaning, car washing, and yard work instead of hiring it out.
These are the big-ticket ways that may make it possible to live richly on just one main income.
Review your medical coverage. Familiarizing yourself with your health insurance - and potential alternatives - takes some time and energy, but it’s well worth it. Healthcare costs add up quickly, so before you even get pregnant is the best time to look at what your plan offers and whether it makes sense to shop around for something better. Consider variables such as hospitalization coverage, co-pays, deductibles, and out-of-pocket maximums. Your baby will be seeing her pediatrician for well-baby visits (and possibly more serious issues) a lot over the first couple of years. She’ll also need the occasional antibiotic and other prescriptions. Make sure you’re aware of what your pre-natal care, hospitalization, and pediatric care will cost you. If it seems high, start shopping!
Take a hard look at your home and cars. Most people live beyond their means, starting with their homes and autos. Do you have a four-bedroom house or a huge gas-guzzling SUV - and only three family members? If these things are standing in the way of realizing your dream of living on one income, downsize. The thought can be painful, but doing so can save you literally hundreds of thousands of dollars, not only on purchase price but also interest savings, lower property taxes, and reduced insurance costs. And if the day comes when you have more children and they must - gasp! - share a room, think of all the invaluable lessons they’ll learn about cooperation and sharing.
Redefine “vacation.” Do you typically think nothing of dropping a few thousand dollars for a week at a resort or a theme park? That’s probably not realistic now. But that doesn’t mean that family fun is no longer an option. How about these vacation ideas:
Rent an inexpensive condo near the beach. With the condo’s kitchen, you don’t need to eat out, and all of your fun will take place at the beach rather than shelling out for expensive amusement parks and shopping trips.
Earn extra cash. How can you do this in your spare time without the need for expensive daycare? If you love kids (besides your own), do a little or a lot of babysitting. If you have a marketable skill, put it to use. For example, if you take great photos or make jewelry, tell all of your friends and family members to spread the word that your services are now available. If you find a part-time job that you really love but can’t afford traditional daycare, think outside the box. Could you do the job at night or on weekends when your husband is home? Could you co-op babysitting with a friend? Could your parents or in-laws watch the kids a few hours a week? If you find someone to watch your kids for free, make sure you reimburse them in other ways: with great meals, by doing their taxes, etc.
Don’t set up a college fund. At least not one that isn’t free (some, like Upromise, can be funded through rewards from the shopping you do anyway). Though financial planners’ heads may explode at the thought, your ability to fully fund your children’s college education shouldn’t factor into whether you can afford to live on one income. Most people put themselves through college, with a little help from loans and scholarships. And guess what? Students who pay for their own education - or at least part of it - typically attend classes more often and do better overall. After all, it’s their money they’re wasting if they sleep through Econ 101! If you can afford to contribute to a college fund and still raise your family well on a reduced income, great. But if not, you don’t owe it to your kids to hand them a college education on a silver platter. No, really!
Top 5 Small Ways to Save (That Add Up Fast!)
Most of the buying decisions you make on a day-to-day basis are small potatoes in the grand scheme of things. But these small potatoes can often make or break you!
Think through every purchase. This may sound cumbersome, but it’s actually healthy and responsible - and it’ll become second nature before long. Most of us are so used to throwing whatever we want into our shopping cart (and worrying about how to pay for it later) that making smarter purchasing decisions may take a while. Think of it like a new exercise routine: it takes a few weeks for it to become a habit. It’s the same thing with living on a smaller income.
When faced with a purchasing decision, consider whether you really need it. Not want - need. There should still be room for “want” sometimes, but really focusing on the difference will help you evaluate how often you make a “want” purchase over a “need” purchase.
Buy used. Until your tot gets to an age where she just has to have the right kind of shoes and the latest clothes, you’re free to get quality used clothing, toys, and gear from garage sales and online auction sites. Kids outgrow everything within the span of a few weeks or months, so much of what you buy second-hand will still be in mint condition. Paying $2 for your son’s shirts instead of $20 will add up quickly. And when you’re done with all of the clothes and equipment, resell it. Cha-ching!
Put your computer to work. With the cost of gas exploding, it doesn’t make sense to run all over town when you’re shopping for something specific. Need a new…well…practically anything? Try the Internet. Not only can you compare prices, but you can read reviews of the products you’re interested in, so you don’t wind up with a waste-of-money clunker. Also, be sure to shop at sites that offer free (or nearly free) shipping, and watch your gasoline bills decrease fast.
Make gifts count. Most people have no idea how much they spend on gifts until they try to cut back - and realize just how extravagant they’ve been. Generosity should be important, but its meaning will have to evolve for your family. Be generous with your time and your intention, rather than with your cash. Would your mother rather have a beautiful picture of her new granddaughter (in an inexpensive but pretty frame) or another costly bouquet of flowers for Mother’s Day? The same goes for your husband.
Instead of a pricey tool that he’ll only use once a year, why not give him gift certificates for whatever he craves from you - or whatever he doesn’t like to do. If he hates to take out the trash, promise that you’ll do it for the next three months. And if he loves a foot massage, tell him that every Friday night you’ll pamper his tootsies. I bet he won’t miss the gadget he thought he wanted!
Find free activities. Lots of stay-at-home parents need some help in the entertainment department - not to mention an excuse to get out of the house. And while mommy-and-me classes are wonderful, they may not be in the budget. But your local library is! Hit up the public library not only for free books that you can exchange as often as your child gets bored with them, but also for free DVDs, music, weekly story times, and even arts and crafts projects.
Another entertainment option is your neighborhood’s public park. Most towns offer parks with playground equipment or just a wide open space where you and your child can play together. Introduce your baby to the fun of swings (the safe, enclosed kind), and take him down a small slide on your lap. Your older child can swing from the monkey bars, and you can ride your bikes (or tricycles) together on the bike path.
A final thought: while there are bucket-loads of ways to live well on less money, you absolutely cannot cut corners when it comes to protecting your family.
- Before you make big decisions about what your work-life situation will be, make sure you’ve addressed the following areas:
- Your will and guardianship issues.
- Life and disability insurance. Both of you need to be insured; if something happens to the kids’ main caretaker, you’ll need require replacement income for her too!
- Health insurance. It’s not worth risking possible financial ruin to go without health insurance so you can live on one income.
- Your complete financial future. With a baby on the way, retirement probably seems like a lifetime away. It’s not. Will your kids thank you if you forego half of your family’s income for 18 years and then have to move in with them because you haven’t funded your retirement? Make sure you can meet your own long-term financial needs on a reduced income.
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