After years of living on two incomes, working moms and dads have a difficult choice to make when a new child comes into their lives. Do they both keep working or does one parent stay at home with the new kid?
For those who are considering the stay-at-home parent route, a strong partnership centered on communication is incredibly important. This life-changing family transition is best implemented when both partners are on board emotionally and financially.
To ease the financial woes that come with eliminating one full-time income from your life, here are seven strategies to consider that will make the stay-at-home parent plunge realistic.
Live on a Budget
If you’re not currently living on a budget and you want to become a stay-at-home parent, start loving that “b-word” today. This important activity can give you the control and freedom you need to make big financial changes in your life.
A completed and consistently utilized budget will give you a clear view on all your income and expenses. Once you know how much you’re bringing home and how much you’re spending, you’ll feel more empowered to develop a plan for living on a single income.
The world of fintech has thankfully made budgeting a lot easier lately. Personal finance apps like Mint, YNAB or Tiller use automatic account syncing to take the tedious work out of the cash flow calculations. And if you’re not into fintech, a simple spreadsheet or a piece of paper will do.
Going down to one income is a lot easier when you’re not dealing with monthly debt payments. These bothersome debts can come in the form of car payments, student loans or even a personal loan that you owe family. Once they’re gone, the stay-at-home parent option becomes a lot more feasible.
Decide today that becoming consumer-debt free is your new way of life. Use methods like the debt snowball or debt avalanche to eliminate your debt for good.
If you’ve relied on adding to debt to get by for quite a while, this may take more time than you think. Try not to get discouraged, just get started.
Decrease Your Expenses
It’s never fun to talk about eliminating expenses from your life. It can conjure up feelings of loss, lacking and deprivation. Instead, turn the focus toward what you’ll gain by decreasing your expenses and making enough room in your budget to become a stay-at-home parent:
- Bonding time with your new child
- A break from the day-to-day grind
- Not having to drive in rush hour traffic
- The ability to watch your child grow
- Creating lifelong memories that you’ll cherish forever
Now that I’ve warmed you up, let’s talk about cutting your expenses!
The goal is to decrease your expenses to the point where you’re only living on one income. Once you’re there, you can more easily make the transition. Depending on the size of your income, though, this may not be such a small task.
Everyone spends their money on different things, but here are five areas that my family personally cut down when we transitioned to a single income household:
- Cut the cord on cable TV
- Change your grocery store habits (shop with a list, switch to a lower cost store)
- Eat at home instead of restaurants
- Negotiate your cell phone plan
- Switch to high-deductible insurance plans (only with a proper emergency fund)
Consider Part-Time Work
Let’s say you’ve eliminated your debt and you’ve decreased your expenses, but you’re still not able to live on one income alone. Don’t lose hope. Consider working part-time to bridge the gap.
Find out what your current employer’s policy is on part-time work. You may be able to negotiate an arrangement that would allow you to report into the office on certain weekdays and stay at home with your new child on others. Your pay and benefits will more than likely decrease, but this still may be a good option for you to consider.
If your employer isn’t down with that arrangement or your job isn’t one that could work in a part-time capacity, consider other ways to make money. When your partner is at home, you could earn income in the evenings or on the weekends. The “gig economy” supported by companies like Uber, Lyft and TaskRabbit have made earning a little extra scratch easier.
Perhaps part-time work isn’t a possibility for the stay-at-home parent. Then it’s time for the breadwinner to win some more bread!
When was the last time the working partner asked for a raise they deserve? This could be a perfect time to get recognition at work and support your growing family.
Be sure to demonstrate your value and past achievements to the company as opposed to discussing your current need. The “give me some more money because I had a kid” line will more than likely not get you the required increase you’re seeking.
Assess the Benefits Situation
Before the full transition can happen, be sure you’ve analyzed what company benefits you’ll be losing by leaving your employer. You’ll want to make sure your partner’s company has the coverage you need to be safe and secure in your new role.
Here are some benefits to consider:
- Health care coverage
- Retirement benefits (401(k), HSA, employee stock, etc.)
- Disability insurance
- Dental coverage
- Vision insurance
The “hidden income” that is involved in company benefits can really throw the single income conversation sideways. If your partner has excellent coverage or you’ve already been living on their benefits to begin with, you’re golden.
Create Life-Changing Action for Your Family
This decision and the actions that follow could very well be the most difficult things you’ve ever done. They could also be the most important things you’ll ever do.
There was a time when you were single when living on one income was possible. You know it can be done. If you’re expecting a child soon, now is not the time to delay. Take action today to provide a future for your family that you’re really proud of.
Are you considering going down to a single income? What tactics will you use to get there? Please let us know in the comments below.
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