How to Become a One-Income Family

Last month I shared a real-life example of going from two incomes to one and gave a few thoughts on how to make this happen. MSN Money goes one step further and gives us five steps to becoming a one-income family as follows:

Here are five basic steps to downsize from two incomes to one:

Step 1: Look at your finances -- and look HARD
Step 2: Redo your budget
Step 3: Live on the single paycheck
Step 4: Look for other ways to make money
Step 5: Communicate -- and perhaps reconfigure

Here's how we did it:

• Both spouses work for a period of time.
• The family lives well below their means, creating a good amount of excess cash.
• This money is used to pay off all debt (including a mortgage) so that monthly expenses are lowered even more.
• One spouse quits work and focuses on keeping expenses low (doing most of the shopping.)
• The other spouse focuses on growing the family's most valuable financial asset.
• In addition, some side income can be developed if needed to smooth the transition from two to one income (until the one career really takes off).
• From there, the focus remains on continuing to grow the family's income while keeping expenses low.

15 years later it seems like it's worked out pretty well.

Let's face it, the basics for becoming wealthy are fairly set and you need to follow them whether it's with one income or two, right? It's just that focusing on growing your income is especially important in the case where your family is relying on it completely for their support and well-being.

Comments

[Rich A.]

We made the move to one income 14 years ago, after my wife gave birth to our first child.

We regret that we didn't live on just one income for the 4 years we were married before our son was born, because it would have been awesome to have built up our savings account during those years.

[KH]

Or, you could get divorced.

[Emily]

Rich, why would living on one income for 4 years prior to having children have helped you save? That makes zero sense. Wouldn't you save more with an extra income?

[FMF]

Emily --

I think he means that they both worked for four years and they lived on both incomes. Instead, he wishes they had both worked, but lived on only one income -- and saved all of the other income.

[Matt]

Or one of you could get laid off. All to common these days. Talk about forced reevaluation.