According to CNN, 46 percent of households with male/female married couples are dual income, with both parents working full-time. That said, there are many reasons why a couple would decide to live off of only one income. Whether you and your partner have made the decision that one of you will be staying home with a new baby, or going back to school, living off a single income requires planning, communication and willingness to make sacrifices. Before making any decisions to transition to one income, you’ll want to to practice living on one income (if possible), discuss healthcare and other benefits and prepare a budget.
Try Living On One Income First
Before anyone quits their job, put your own idea to the test. Of course, this will only work if someone was planning on quitting and didn’t unexpectedly lose their job. If you and your partner think you can live off of one income, the only way to find out is to try it firsthand. Start depositing one spouse's income into a separate savings account, and don't touch that money.
After a few months, you’ll have a good sense as to whether or not this is feasible for you and your partner. The added benefit to this exercise is by living on one income and saving the other for several months, you'll also gain a significant savings cushion. This cushion will undoubtedly come in handy once you’re actually living off of one income.
Have a Plan for Healthcare and Benefits
It’s important to have a conversation with your partner about how you’ll replace any benefits before making the transition. It could be a rude awakening to go from having employer paid health insurance to paying for it yourself. However, going from two incomes to one could put your household in a lower tax bracket and qualify you and your family for government-subsidized healthcare.
Retirement planning is another area to consider. Even a non-working spouse can be saving money for the future. So long as one spouse has a job, according to US News and Money, a spousal IRA can be opened for the non-earning partner.
Prepare a Budget
Again, before anyone quits their job, couples should sit down and outline a realistic budget based on a single income. The task may seem daunting at first, but you may be surprised as to how much spending you can actually cut down own. Perhaps you’ll find that you have been spending unnecessary amounts money all along. Be sure to include obvious expenses like mortgage or rent, bills and groceries, but also less obvious ones like dining out and monthly subscriptions.
The transition from two streams of income to one isn’t always easy, but that doesn’t mean it can’t be done. Keep an open line of communication with your partner and establish clear expectations with one another to live successfully off of one income.