How to transition to a single income family

May 14, 2012 — Leave a comment

After I graduated from college, most of my married friends became SINKs (single income no kids) or DINKs (dual income no kids). It’s a common transition for our generation because it’s expected that both sexes will have jobs when there are no kids in the picture.

Many of these individuals went on to great careers and some of the SINKs transitioned to DINKs. After rounds of weddings, it was time for the next stage for many… rounds of kids.

Some of the women in the picture had already established a great career with a nice income. They swore they’d never leave the engagement and excitement of their careers. However, for many this changed when their new family additions came along. So what happens when DINKs become SIK (single income, kids – no pun intended!)?

If you’re transitioning to a single income family, things are going to change and there’s probably going to be less money to go around (obviously).

Since this transition is a major life changing event for everyone involved, make sure both of you are on the same page. If you’re not, it will nearly impossible to pull off because you’re going to be moving in different directions. Sit down with your significant other to discuss your short term and long term goals. Does the spouse think they’ll quit work for a few years or until the kids are grown up? Is there work they can do on the side to earn extra money?

After you are on the same page, the next step is to figure out your current and future financial picture. Many of the steps of transitioning to SIKs is the same as taking control of your money. You have to figure out what you’re spending today and know how that will have to change when you lose an income.

Here are the main steps to take control of your money:

1. Complete a current assessment

2. Track your spending

3. Create a spending plan

4. Monitor plan and adjust as necessary

5. Save some money

6. Attack your debt

After you figure out how much you are spending today (step #2), the main modification you’ll need to take is with step #3. Instead of using your current income to create your spending plan, use your new single-family income to see if you can get your current spending in line with it. If not, you may not be ready to make the transition.

If possible, the best thing to do is to transition to the single income before the time to quit even comes. If you can live off of the single income for six months without digging into savings, you’ll be in pretty good shape. If not, you have more work to do. Additionally, if you’ve survived the six month trial with a single income, you’ll have six months of savings as well!

If you haven’t had the kid yet, you also need to think about costs associated with the birth. According to the Cost Helper, typical costs to deliver a child are:

– Normal birth, no insurance: $9,000 – $17,000

– C-section, no insurance: $14,000 – $25,000

– Both births with insurance: $1,500 – $3,000

Apparently the baby gets a separate bill as well, which typically ranges from $1,500 – $4,000

In addition, you need to think about how much the kid will cost you annually.  According to the US Department of Agriculture, the average amount spent on each kid varies widely by income level, but looks like this:

– Income less than $57,600 = $8,480 to $9,630 per kid

– Income between $57,600 and $99,730 = $11,880 to $13,830

– Income more than $99,730 = 19,770 to $23,600

Don’t be too scared, because 31% of this is your estimated housing expense increase because of the child. If you don’t plan on moving after the kid, then you should already be at this number. However, you’ll also need to factor in some of the other expenses into your future spending plan.

It may sound dark and ominous, but another thing to think about is that some of your expenses might be cut when one spouse leaves the work world. Some savings areas to think about:

– No more paying for full time daycare!

– Decreased food costs because you should be able to cook more and eat out less

– Decreased expense on work clothes

– Decreased expense due to no more daily commute

It won’t be easy to transition to a single family income, but it’s important to focus on the upside. The upside of course is that you’ll be able to spend more time raising the kids! Maybe you can even teach them the five things formal schooling doesn’t teach us! It’s going to be hard… but if you both really want it, it will be worth it.

Have you made a transition to a single income? If so, what worked for you? (remember by adding your comments, you’re helping a bunch of other people!)

Sharing is good for you and me!Share on FacebookTweet about this on TwitterShare on LinkedInEmail this to someoneShare on StumbleUpon

No Comments

Be the first to start the conversation.

Leave a Reply

Text formatting is available via select HTML. <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

*