Cece Mitchell, manager of Zions Bank’s Women’s Financial Group, talks through the transition.
Taking the big leap from a double-income household to a single-income household may seem daunting, but the transition can be smoother through diligent planning and cooperation between both spouses.
Choosing to live below your means is very personal. There is no “one size fits all” solution for making the financial transition. But planning and strong communication are key to your family’s success.
Take the time to sit down together to discuss long- and short-term goals, values, and philosophies about money and spending. Doing this will give you more confidence in your vision for the future. Begin by talking together about your values – things like security, family, spirituality, and making a difference in the community. Do your financial goals align with the things you care about most? You’ll live a richer life by using your money to fulfill your values. Continue to communicate regularly about money in order to stay on the same page and avoid conflict.
2. Create a budget…and stick to it.
Work together to create a plan for your money. Save all receipts or jot down all your expenses in a notebook for a month. Don’t forget to add in your little purchases—packs of gum or specialty coffee drinks. Keep your records as accurate as possible. Then, look closely at your fixed expenses and your variable expenses. Find wiggle room as needed. Next, make a budget to tell your money where to go. Don’t be afraid to tweak it a bit, but by all means: stick to it. Examine your expenses and find areas to cut back. Remember, a budget is a working document that might need tweaking. If the blueprint isn’t working, make the effort to fine tune it.
3. “Practice” life on one income.
It’s a good idea to “practice” living on one income for a few months before taking the big leap and leaving a job. Your budget will guide you through this transition. For example, if you are planning to shift to a single-income household after the birth of a baby, try living on one income before the baby is born. Get used to living more frugally. What to do with the secondary income? Put it away in the bank so that you’ll have a cushion of cash for unexpected events when you make the shift.
4. Don’t forget to Save
Even if you’re living on less, you need to continue to make saving a priority. Make sure you’re contributing to an employer’s 401K plan, an IRA, and a regular savings account. Consider making your savings contributions by automatic payment, rather than planning to do it at your own discretion. And don’t forget to update the wage earner’s W-4 so that non-earning family members are listed as dependents.
5. Ignore the Joneses.
Transitioning to a single income will take sacrifices. Don’t try to keep up with the Joneses. Keep in mind your values, what is important to you, and why you decided to shift to a single income. Don’t feel pressure to “keep up with the Joneses.” Recognize that you will have to do without some splurges in order to live your values on one income.
The Zions Bank Women’s Financial Group provides women of all ages and financial situations with the information they need to achieve their financial goals. Built upon Zions Bank’s 135-year foundation of strength and stability, the Women’s Financial Group can help you meet your financial goals. Whether you’re a stay-at-home mom or the owner of your own business, you can depend on our friendly team of banking experts to guide you through the growing sea of financial choices.
For more information, visit any one of our branches or call the Women’s Financial Group at (801) 844-7996 weekdays between 9 a.m. and 5 p.m. More information is available at: https://www.zionsbank.com/biz/womens_finance.jsp.