How to transition to living on a single income
Whether you are having a baby, moving into a new place or preparing to start a new business, there may come a time when you and your significant other have to transition from living off two incomes to living off a single income. With the right strategy in place, anyone can survive this big lifestyle change. Learn how to begin making the shift with our tips below.
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1. Talk It Out
In order for the transition to work, it's important for you and your partner to be on the same page. Part of that involves deciding what roles each person will play in the relationship once the change takes place. Will the partner who becomes the family breadwinner be responsible for paying for all of the bills and expenses?
Once you and your partner know what you want to do, it's a good idea to plan ahead. That means that you might have to focus on staying out of debt and steering clear of lifestyle inflation as you move toward living on a single income.
2. Re-Work Your Budget
It may seem obvious, but if you're going to begin living on a single income, your spending habits will probably need to change. If you don't have a strict budget in place right now, it might be wise to track your spending for the next few months. That way, you can figure out how much you're spending on necessities and luxuries.
Once you have a sense of where your current budget stands, you can crunch the numbers and create a new budget based around a single salary. As you trim your budget, you might have to cut out the big-ticket items first. Keep in mind however, that it's important to be practical and avoid sacrificing too much. You don't want to set up a budget you can't stick with.
When you sit down with your partner to discuss your budget, it's best to try to keep the conversation open-ended so that both of you have a say in how you're going to manage your money. And above all, remember that your transition should not eliminate your retirement savings strategies or your fund for emergency expenses.
Find out now: How much do I need to save for retirement?
3. Practice Living on Your New Budget
Once you've calculated how a potential change in your budget might work, it's a good idea to try living on just one income for a while. See if you can be content with less and try to think about some of the benefits that might come with the transition. For example, if only one person works, your family might have a more flexible schedule and more free time.
As you practice living under your new arrangement, you'll need to consider whether you can come to terms with your new lifestyle. Comparing your personal circumstances to your neighbors' or friends' living situations probably isn't a good idea. Remember that ultimately, you and your partner will have to do whatever works best for your family.
Related Article: Budgeting for a Rainy Day – How to Grow an Emergency Fund
Final Word
Living on one income can be tough, and the real challenge is finding a balance between cutting your spending and continuing to save. If it doesn't work out, the partner who isn't working can always pick up a part-time job or a side hustle.
Related: Items you should stop wasting your money on
Photo credit: ©iStock.com/danchooalex, ©iStock.com/eternalcreative, ©iStock.com/kinemero
The post How to Transition to Living on a Single Income appeared first on SmartAsset Blog.
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