Becoming a one-income family can be a tough balancing act, and it's not a financial situation for everyone. In fact, while we make things work pretty well as a one-income family, there are certain items that we've had to give up along the way to make such a situation work.
My wife and I both work; however, I'm self-employed and do so from home and she works in a school district with summers off. This means that even though we're dual income, we only make about half of what we did before we started having kids and I left my regular job. So it's like we're a one income family. Thankfully though, being a fiscally responsible family, we can find ways to cut back in order not only to survive but thrive on the equivalent of one income.
As an at-home parent, the thought of an additional vehicle is quite appealing. Not only would it give me a little more freedom, but it would open up more daily activity and entertainment options for the little ones such as going to the zoo, hitting the grocery store if we were in need of something, or just getting out and about in an area somewhere other than the one in which we live.
However, when I left my regular work role to become self-employed -- taking a significant pay cut in the process -- we decided to also become a one vehicle family. Not only did selling my vehicle result in some extra cash at the time of the sale, but it saved us on things like insurance (about $500 a year), parking (also about $500 a year), and gas, vehicle maintenance, and all the rest that comes with owning a vehicle even when it's not being driven that much.
A More Secure Retirement
Less income means lower contributions to retirement for us. Since I don't have an employer-sponsored retirement account (a matching employer contribution being much of the reason I put money into such a plan when I had one), I don't find the tax advantages of such a plan enough of a benefit and therefore haven't recently contribute to my IRA.
Meanwhile, my reduced self-employment income means that less money is going toward Social Security even though I'm paying nearly double (both employee and employer portions) in Social Security tax as a self-employed individual as what I was when I worked for a regular employer. While lower contributions might seem like a savings advantage in the near-term, it could hurt me down the road in retirement.
Getting out and Socializing
Living off of one income means less dinners out, fewer trips out to the bars, and just going out less often with friends and colleagues. While we were never what you might consider bar flies or regularly dined out before we became a one income family, there were times when we would go out with co-workers after work, have weekend dinners with friends, and partake in similar events a bit more frequently. However, such activities can add up to additional costs, costs that can put a real strain on family finances in a one income scenario; therefore, we've cut back to just two or three such events each month at most.
The Ideal Living Situation
As a one-income family, we left our over 2,000 square foot home to move into what we live in currently, a small two bedroom one bathroom condominium. We love the condo unit, the location, and the style of the condo. However, just having had our second child leaves us a little cramped for space. With savings of around $1,400 a month though in our new downsized living situation compared to our previous home, we find it well worth the sacrifice though.
Taking Care of the Kids Ourselves
Being able to take care of our kids certainly isn't a sacrifice from my personal standpoint, but it could be considered so from a financial standpoint since it means that I won't be working as much either at a workplace or at home. Taking care of the kids means that as hard as I try, I end up giving up productivity (which as a self-employed individual equates to income). However, I tend to make up for this diminished income though the fact that we aren't paying childcare, which in the Chicagoland area in which we live could easily add up to around $13,000 a year per child. And with our second child having just been born, this aspect of being able to take care of our kids ourselves can be viewed as somewhat of a positive of our being a one-income family.
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