by Michelle Jones
My husband and I have been married for almost thirty years and have helped many families with their finances personally and here at Better Budgeting. Whether you're just starting out as a couple or have been together for many years, if you're living on two incomes, please heed this very wise budgeting advice.
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Base Your Budget on ONE Income Not TWO
Living on one income is not as difficult as it may sound, however, when you're a couple accustomed to earning (and spending) two incomes you may think it's IMPOSSIBLE. If you've been living to the max on those two incomes this may even sound beyond impossible. So before you decide that I've completely lost my mind, let me give you a few things to think about.
Depending on Two Incomes Can be Dangerous
Common Scenario: Your budget requires two incomes just to get by.
You've increased your budget, incurred debts, and made every financial decsion based on that double income. Now, you are dependent on all of the money coming in each and every month.
If you're extremely lucky, the two of you will live happily ever after and never have a decrease in that income for your entire life.
If you're living in the real world, the two of you will experience bumps in the road when someone gets sick or loses their job and are forced to live on one income either temporarily or permanently.
Better Scenario: You have two incomes but your budget only requires one to run smoothly.
You've kept your budget low, kept debt under control, and made financial descisions based on one income and not both. As money comes in from additional incomes it is set aside for savings and extras. Now, you are NOT dependent on both incomes.
Whether you're luck or not, there really is no downside to this option.
Preparing for Difficult Times
If your budget is based on two incomes, will you be able to conintue paying your bills if one of those incomes were to suddenly stop?
Turning Dreams into a Reality
In addition to being financially prepared for difficult times, living on one income has other advantages. Whether you or your spouse want to stay home with the children, go back to school, start a business, or whatever... you'll be able to use that second income to make those dreams a reality.
AND, as long as you are continuing to bring in two incomes, consider investing some or all of that extra money instead of spending it on other things. If you never have a serious financial crisis or need to dip into your savings, you'll have a huge nest egg saved up for retirement.
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Copyright © 2001, 2015 by Michelle Jones. All rights reserved.