(K-LOVE Closer Look) – Families with two working parents sometimes wonder – could we make it if one of us lost our job? COVID-19 layoffs forced the question on thousands of households, and for others the pandemic reignited serious table talk about money. “We live in a culture that I would call a ‘two-income world,’” says budgeting expert Mary Hunt. She readily admits the challenges of living on one income. “But here’s the good news – yes! yes you can do this.”
But first you must ask yourself: do I really want to live on one-income?
“Because of the way credit cards and living beyond our means has become the normal way of life, it’s like swimming upstream,” she warns, so families must take a hard look at debt and spending. “We have to get away from the lie the credit card industry has told us, that ‘it’s not safe to carry cash,’ or ‘it’s not safe to pay for groceries with cash.” She blames the banks. “Let me tell you something, that is a lie! What they’re trying to do is get you to start depending on plastic -- and eventually you fall into debt.”
Once a family has decided to test the waters of change, Hunt recommends a 7-Day Cash Diet for everyday expenses like gas and groceries. “It’s going to change the way you think and live,” she promises, because “all of a sudden you’re looking at prices, you’re looking at sizes, how you can get by with 2lbs of potatoes instead of 5lbs.” Buying in cash for a while “is the best way to pull in the reigns to manage your money in a reasoned way.”
The next step is adding up what that second income is actually costing you.
Expenses like gas to get to the job, daycare for the kids even the fast food you buy because you are too tired to cook – every dollar associated with working must be subtracted from the net pay. “What is the ‘real hourly wage’ of that second income?” Hunt says people are often shocked that their second income boils down to actually just $1 or $2 an hour -- and may be pushing them into a higher tax bracket.
But can a family live happy and healthy on what seems to be less money per month? Hunt firmly believes they can. “You can’t do this overnight,” she cautions, as “sometimes parents need to go through a whole process of deciding who is going to be the one who gives up the formal income and how to make that one income stretch twice as far." Then you may have to get out of debt to pave the way, “which means you have to stop using the credit cards.” And finally, she says, resist peer pressure to live beyond your means.
“Don’t get discouraged if you cannot do this immediately -- like turning in your resignation tomorrow morning -- you gotta get a plan.”