There may come a time in your relationship where you or your spouse realizes that you need to step down from your job. Whether this is to care for children, some other form of caregiving, to reduce stress or for any other reason, many couples do make this choice at some time. Doing so can allow you to spend more quality time with loved ones or enjoy a calmer and more balanced life, but it also completely changes your financial outlook. Besides the obvious issue of whether you can survive on less money, here are some questions that couples should ask themselves before they make the jump from two incomes to one.
Can You Pay All Bills on One Income?
It’s such an obvious question it may seem silly to include it, but the fact is that what looks good on paper might not play as well in reality. According to The Balance, you should practice living on one income before you actually do it to see how realistic it is (and in the process, you might save money you can use as a buffer).
Do You Have a Plan?
Even if you’ve worked out the numbers and know that you can live on one income, you still want to have a plan that includes such things as: How will you afford unexpected bills that aren’t accounted for? When you decide to return to work, will you reach out to your old job or strike out for a new one? Will this be permanent or temporary?
How Close Are You to Retirement?
Dropping to one income means you’ll have less to put toward your eventual retirement. If you’re on the younger side, you still have years to put money into a retirement plan and a short-term pause may not be a big deal. If you’re a lot closer to retirement, you may first want to check out what you’ve got saved so you can decide if this income reduction will put you too far off track or not.
Are You Prepared To Go Without?
At the time you’re thinking of dropping to one income, all you may be seeing are the benefits: not working or working differently, less stress, more time with your kids or spouse. But it also means giving up things that you could previously afford, from take-out to your favorite streaming service. Be sure you’re really willing to do with less material things before you make the leap.
Can You Take Family Medical Leave Instead?
The Family Medical Leave Act allows for an employee to take a leave for as much as a year depending on the circumstances while still receiving benefits. It’s worth looking into whether your company offers this or other kinds of leave, such as unpaid sabbaticals, that you could take advantage of and still hold onto some of the benefits that are so hard to give up.
Do You Have an Emergency Fund?
Unexpected costs are going to arise. Things that you don’t have neatly fitted into your new one-income budget, from car or appliance repairs to unexpected tax or medical bills. Do you have an emergency fund with a buffer that can help pay for these things? If not, you might find yourself racking up unwanted credit card debt or personal loans that are hard to get ahead of on one income.
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