Some people choose to live on one income to help them save for the future. Other people live on one income due to necessity. Our family has done both at one point or another. However, as of late, we've been back to a two income level again; however, we still get some practice living on one income each summer.
Seeing as how my wife works for a school district and has summers off, our income drops dramatically during these months, and in the process we get some time to again remember what it's like to live on one income. This annual event is good practice and serves as a reminder of what we need to do when income suddenly drops.
I tend to do our forecasting for the year well in advance to that year actually beginning. However, as summer approaches, I tend to do a re-evaluation of where we're at financially -- expenses, potential income, savings, areas to cut back -- to ensure we're properly prepared for the upcoming temporary hit to our finances. This way, I have a pretty good idea of what we're looking at for this timeframe financially, and I know whether there will be any bumps in the road along the way.
When we're on one income, there are extra expenses that arise that we don't necessarily have to deal with during the rest of the year. One big one is health insurance. Yes, we have coverage during the rest of the year, but it comes out of my wife's paycheck. However, during the summer, we're on our own for paying this additional expense. And at an extra $150 a week, this expense can be a big one. Add in things like summer sports for our son, a vacation, and other summer events like trips to the zoo and other summer fun for the kids, and we can see our costs actually go up during our lowest income period of the year.
Forecasting for these expenses several months in advance, and knowing what amounts these expenses will arrive in, allows us to prepare in advance and set a little more money aside before my wife starts summer break to ensure we'll have enough to cover this gap.
Since through my forecasting I know that there will be certain higher costs that come during our "one income" period, I also know that I should be looking for ways to cut back in other areas. Since health insurance costs are off the chopping block, as are many entertainment options, we look for savings in other areas. Since my wife isn't working, we tend to cut transportation costs dramatically, often saving upwards of $300 a month in this area. We also look to save on utilities, keeping natural gas and electricity costs lower by as much as $50 a month compared to winter months by opening windows, shutting blinds when the sun is blazing, and using a box fan and/or ceiling fan rather than the air condition to help keep us cool inside.
Extra Income Considerations
The summer -- even though it comes with reduced income -- can come with opportunities as well. My wife has the option to pick up extra work if she'd like. We typically have a garage sale or two with the extra time off my wife has in an effort to downsize a little and earn some extra cash. We can earn upwards of $400 or $500 from these sales while also getting rid of stuff we no longer need or want. We also have time to go to garage sales, looking for items that we could in turn resell for additional cash. These are all options that help us weather the one-income storm a little better and make our summer fun even on a reduced income.
*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
More From This Contributor:
The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.
- Personal Budgeting
- Banking & Budgeting