Months of lockdown and uncertainty have prompted many families to reevaluate their priorities and way of life. Some, aiming for more stability at home during the upcoming school year, are trying to determine if they can make it on one income.
I asked Rachel Cruze, a financial expert, bestselling author, and host of “The Rachel Cruze Show,” for her advice to families considering this lifestyle shift.
The Epoch Times: What steps would you recommend a family take to evaluate their financial state and determine if living on one income is feasible for them?
Rachel Cruze: If you’re a parent homeschooling kids right now, I feel for you. Managing a full-time job on top of trying to master this new at-home teaching thing is no joke!
Before you make the jump to one income, sit down with your spouse and create a budget of what life would look like if you quit your job. It’s nothing earth-shattering, but if you don’t tell your money where to go, you’ll wonder where it went. A budget is simply putting your vision down on paper to see if you can make it a reality.
List your single household income minus all of your expenses—this includes everything from your mortgage to the money you spend eating out every month. Once you have your budget, try living on one income! Spend a few months living on your new budget and see how it works. As a bonus in the meantime, you can use your second income to pay off debt or add to your savings if you’re already debt-free.
The Epoch Times: What key considerations should be taken into account when transitioning from a two-income household down to one?
Ms. Cruze: Before you drop to one income, I want you to be debt-free with a fully-funded emergency fund. If your finances are not in order with two incomes, it’s only going to get worse on one.
If you’re already debt-free and have three to six months of expenses saved, there are a few other questions to consider once you’ve done your new budget. Does this put you in the negative or close to it? I don’t want you to get into a position where you can’t afford to pay your bills and start relying on debt. Debt is only going to add stress to an already stressful situation. Taking on debt is never a good idea. It will keep you living paycheck to paycheck forever. I don’t want that for you!
I really want you to make a decision that’s best for your family. If you’re not in a good place financially now, it doesn’t mean it’s impossible for you to get there. You just need to get intentional with your money and make a plan. And that plan is a budget!
The Epoch Times: What changes might families consider implementing to make living on one income more feasible?
Ms. Cruze: Look at your lifestyle and assess what you might be willing to sacrifice to make this work. You might decide that you could live in a smaller home if it meant more quality time with family. In that case, you could consider downsizing or even refinancing your home. Interest rates are low right now, so this could be an option that might save you hundreds of dollars every month. Talk to a professional to find out what makes most sense for you.
Once you have your new budget in place, you’ll quickly see unnecessary expenses that can be cut or scaled back. Just be realistic with what you think you can do without. There are certainly ways to cut down on your grocery bill, but you can’t eliminate it completely. You can eliminate shopping and eating out. You just need to ask yourself how much you are willing to sacrifice to make this happen.
Process these questions as a family and make sure that what you decide allows you to focus on what matters most to you.
The Epoch Times: What are some ways a family might be able to supplement their one income, short of adding a second income?
Ms. Cruze: Quitting your full-time job doesn’t mean you are never destined to work again. A side hustle or a part-time or freelance gig could give you the extra cushion you need to be able to make this a reality.
There are plenty of contract roles and part-time positions available right now. Companies are pivoting and reinventing everything that they do, which means they need help. Think about areas where you have skills that could be useful right now. Do you have a knack for social media or writing website copy? Are you a teacher who could do tutoring online instead? Think about what problems you can solve for people, and start reaching out to companies, letting them know what you can do to serve them during this time.
The Epoch Times: What final advice would you like to offer families who hope to allow one parent to stay home and manage the household and take care of the children full time?
Ms. Cruze: Whatever you decide, show yourself some grace. If you and your spouse both keep your jobs, that means you have a heavier workload. You both have full-time jobs and now you’re both teachers at home with your kids. You won’t do everything perfectly every day. And that’s OK!
Whether you leave your job or not, set new boundaries so that you and your kids have more of a balance at home. Create set hours for school, work, homework, and don’t forget to carve out time to actually enjoy each other’s company. Working and doing school together isn’t exactly quality time. Have family dinners, go for walks, and find activities you all enjoy together.