How Our Family Successfully Transitioned from Two Incomes to One
When my husband and I decided he should chase his dreams of being a content creator, we knew it would mean a big shift for our family—from two incomes to potentially one. This decision was significant, and we wanted to make sure we were fully prepared before taking the plunge. Here’s how we did it and how you can, too.
Redoing Our Budget
The first step was to completely overhaul our budget. We needed to ensure that my income alone could cover all our expenses. With my husband’s income being unpredictable, we wanted to plan as if he might make nothing, which meant my salary had to be enough to keep us afloat.
After crunching the numbers, we realized that my income fell short by about $500 each month. While this gap was concerning, we didn’t let it deter us. Instead, we took a hard look at our overall financial situation to see how we could still make it work.
Leveraging Our Emergency Savings
One of the key factors that gave us the confidence to proceed was our emergency savings fund. We had built up enough savings to cover all our expenses for three months if we had zero income. Even better, if I continued working and my husband earned nothing, this fund could cover the $500 gap for over a year.
In addition to our emergency fund, we had some data suggesting my husband was likely to make around $500 a month based on his earnings before going full-time. This combination of savings and potential income made us feel comfortable moving forward.
Increasing My Income
The final piece of the puzzle was increasing my salary. Before this transition, I was working a 32-hour week, which gave me the luxury of an extra day off. However, to make this plan viable, I decided to add Fridays back to my schedule, increasing my workweek to 40 hours. This change boosted my salary by 20%, closing the gap in our budget and providing the financial security we needed to take this leap.
Tips for Transitioning from Two Incomes to One
If you’re considering a similar move, whether to start your own business, stay home with your kids, or pursue another dream, here are some steps to help ensure your financial stability:
Redo Your Budget: Make sure the stable income can cover all your expenses. Plan as if the second income might be zero.
Build or Review Your Emergency Savings: A healthy savings account is crucial. It acts as a safety net in case of unforeseen gaps in income.
Increase Your Income: If possible, find ways to increase your earnings before making the transition. This could be through working more hours, seeking a raise, or finding additional income streams.
Avoid Dipping into Savings Monthly: If you’re staying home without earning extra money, ensure that the remaining income covers your expenses in full. Consistently dipping into savings is not sustainable in the long run.
Transitioning from two incomes to one is a big decision, but with careful planning and a solid financial foundation, it can be done successfully. I hope our experience helps you navigate your own journey.
