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Want To Increase Your Savings? Live On One Income

couple discussing finances

Couple calculating their budget

You would think that in order to increase your savings, you need to have at least 2 earning individuals at home. In fact, in most households, both couples are forced to have a job so they can make ends meet. Having both husband and wife earning may seem like the family will be better off financially. But did you know that it is possible to grow your savings even if only one person is earning an income?

Unless you are both career-driven, you probably have thought about quitting and staying at home to take care of the fort. If you feel like you are not getting paid what you are worth anyway, this may be a great option for you. A young couple who want to start a family would be talking about this too. Someone needs to stay at home to take care of the kids – especially while they are young. This would be a very good reason to live on one income.

But if you have dreams of buying something big in the future, you know that you need to increase your savings. And if you want to maximize what you can save, you know that the most logical thing to do is to have both you and your partner or spouse working.

According to a the daily consumer spending found at Gallup.com, Americans spend an average of $90 each day. That makes $2,700 a month. That amount does not include any payments made towards the house like mortgages, and household bills. Any expense on cars or vehicles are also not included here. So you can see that this amount is actually higher. That means the average household needs to spend at least $3,000 to $3,500 each month.

Do you think your home can afford to meet this expense with just one person earning a living? And what if you want to increase your savings? Would it be possible with this spending statistic and one income?

It will honestly not be a walk in the park but it is very much possible.

Saving benefits of having one stay-at-home parent

Believe it or not, there are saving benefits if you have a stay-at-home parent in your household. Do not frown upon those who decided to quit their job to take care of their career. They may be saving more money by staying at home instead of working for someone else. If you have the right situation, it may be more feasible to just quit your job.

There was an article that went viral a few months ago that indicated how much a stay at home mom is really worth. This was an article written by a husband with a stay-at-home wife. This article published on WeAreGlory.com gave specific figures that will give you an idea about how much a stay-at-home parent would be earning if we paid them for the work they do at home. Let us enumerate what was indicated in the article.

  • Child caring services. The author started by stating how his wife cares for their son every day. Changing diapers, feeding, playing, comforting, putting to sleep – all of these are tasks that his wife does day in and day out. If you hire a full time nanny to care for your child that way, you have to spend $705 a week or $2,820 a month. In essence, your wife (or husband), would be worth more because they care for your child 24/7.
  • Cleaning services. The one staying at home is usually the one cleaning the house too. This costs $50-$100 per visit – depending on the size of the house and how thorough you want the cleaning to go. If you have pets too – that will cost more. This is easily $100 a week – or $400 a month.
  • Personal shopper. Whenever your wife goes out to run errands like doing the groceries, buying gifts for family and friends, and going to the dry cleaners, that is a career too. The people who do this professionally are called personal shoppers. And they can cost you around $65 hour, for 4 hours a week, that is $260 a week or $1,040 a month.
  • Personal chef. Now this can be costly. A chef preparing 5 meals with 2 servings each can cost $400 or more. To be conservative, the author of the article gave an amount to $240 a week. That is $960 a month.
  • Financial assistant. Most of the time, the one staying at home is the one handling the finances because they know how much money is needed to keep the house stocked and in order. Whoever stays at home will most likely do the budgeting, paying of bills, etc. That sound like the work of a financial assistant who earns around $15 an hour. Assuming this will take around 5 hours a week to organize financial matters at home, that means $300 each month – at the very least.
  • Washer/Dryer personnel. Doing the laundry costs $25 a week. This will means it will cost you $100 a month to have all the dirty laundry in the house taken cared of.

We could go on and on because there are other things that a stay-at-home parent does around the house. But if we stop here, we are looking at a monthly salary of $5,620 or $67,440 a year. If you think about it, that is the amount that you are saving if one of you stays at home. Who would have thought that living on one income is actually a great saving tip?

If one of you earns less than this amount, then quitting your job could make sense. You would be able to increase your savings for future purchases.

How to transition into a one income household

According to the PewSocialTrends.org, there are more stay at home moms in 2012. In 1999, 23% of moms do not work outside. In 2012, that percentage went up to 29%. A lot of those who chose to stay at home are married and thus have husbands who are financially supporting them. These are the women who have consciously decided to stop working to care for their kids. Most of the single or unmarried mothers who are staying at home have done so because they could not find a job – and not because they decided to.

Of course, you have to deal with having a low monthly budget when only one of you is earning at home. While it may seem like a difficult task, it is possible to be happy while in a low income household. You just have to know how to transition to it properly.

  • Visualize how your budget will be like with one income. Before you go ahead and quit your job, create a budget and see how the household will fare with only one income. That way, you can discuss with your spouse if it is feasible or not. Here is a video that you can watch for some tips when creating a budget for a one income household.

  • Make sure you have an emergency fund. Increase your savings first before you quit your job. That way, any unexpected expense will not cripple your budget immediately.
  • Identify the expenses that you can get rid of. Definitely, you need to lower your expenses so you can increase your savings despite a lower monthly cash flow. Try not to sacrifice your savings. You need to have savings so try to sacrifice your expenses instead of your emergency fund. If you have to downsize your lifestyle, that could be arranged. Selling some of your stuff could help increase your emergency fund.
  • Have a plan for your debt. In case you have debts, you need to get rid of them before you live on one income. When you get rid of debt, it is one way to increase your savings too. You are wasting money on the interest amount that you pay towards your debts. Eliminate that and living on one income will be easier.
  • Try to find part-time work that you can do at home. Of course, staying at home does not really mean no income can be generated. There are so many work from home careers out there. You may be able to generate some income by becoming an online freelancer.

With some great financial management skills, it is possible to increase your savings even if you are living on one income in your household. Once you get the trick of budgeting and smart spending, it should all come easily. Not only will you be financially smarter, you have a better chance at creating a high quality home for you and your kids.

How To Save On Child Care Costs

smiling family with cash at the backgroundParenthood is probably one of the most rewarding experience that you will ever face. But despite the undeniable joys of raising a child, it can also be extremely difficult.

With a child in your house, your household budget will increase to eat off a bigger chunk of your income every month. It seems like the way society is built, we are expected to pay for a lot of things to make our lives comfortable. But despite that, there are many ways that you can save money today and that includes child care costs.

When it comes to our child, we do not want to settle for anything that is second rate. At least, if our finances can help it. We want them to have the best life there is and we do not want them to feel like they are lacking in anything. But like everything else that is important in our lives, this is easier said than done.

How much does it cost to pay for child care?

One of the challenges in raising a child involves the child care costs. It is one of two things. One of you or your spouse can give up their career to stay at home and care for the child. That would mean relying on one income to support the whole household. The other is to spend for professional care so both of you can continue working.

No parent will pass up the chance to watch their child every single minute. But that is not the reality for most of us. Some of us need the dual income or are single parents. So if it cannot be us, we obviously want someone who is trained to be a professional child care specialist.

The Census.gov shows us some interesting statistics about child care here in the country. Here are the statistics that includes child care costs.

  • 32.7 million children are currently in child care arrangement. 12.5 million are preschoolers (0-4 years) while 20.2 million are in grade school (5-14 years).

  • 27% of child care arrangements are with relatives (grandparents, siblings, etc) while 25% are with organized facilities (day or child care centers, preschool, etc).

  • 22% of the children are being cared for by a stay at home parent.

  • 88% of preschoolers have employed moms and that means they are most likely in a child care arrangement.

  • 55% of stay at home fathers who have employed wives are caring for their children (5 years and below).

  • As of 2011, the average child care costs in a week is $143. For preschoolers, the cost is $179 while grade schooler care cost $93.

  • In 2011, 32% of families are paying for child care arrangements.

  • For families in poverty, child care costs take up 30% of their income.

Source: http://www.census.gov/how/pdf/child_care.pdf

Tips to lower your child care expenses

All of these statistics can make your head spin because you want to make sure that you can afford to pay for your child’s comfort, safety and protection. $143 a week is $572 a month and $6,864 a year. If your household only live on $30,000 a year or less, that can really be a huge dent on your budget.

But just like everything else, there are ways for you to lower your child care costs – if you only know where to look. Here are some tips that we have for you to help make child rearing more affordable.

  • Ask for child rearing benefits. There are companies who offer this benefit to parents to help ease their worries as they work. Not only that, some of them even have their own child care facilities near the office so you can stay close to your child as you work.

  • Child care cooperatives. It is possible to organize a child care cooperative between employees with young children. You can help coordinate with your office and the employees involved will be in charge of running the facility. All the company has to do is to provide a place within the workplace and purchase a couple of items for the child care center. You can also arrange this in your neighborhood. It is a more complex form of babysitting for a group of parents. You may even have a local child care cooperative near your neighborhood. You can check out Preschool.coop to check how you can join this network.

  • Look for tax breaks. The Child and Dependent Care Credit is a tax break that you can claim to help cover your child care costs. Even during the summer time, you are eligible to get these credits for day camp (not overnight camp).

  • Use the flexible spending account. Some employers will allow you to put as much as $2,500 a year per parent into a savings account that will be taken from your pretax income. Since this is a flexible account, you can take your child care costs from this fund. If both of you will put money here, you have $5,000 a year.

  • Apply for government assistance. The Office of Child Care (OCC) used to be the Child Care Bureau and they provide support for low income families. They help in providing high quality yet affordable child care services. This is done through the Child Care and Development Fund that the OCC administers.

How to prepare for the high cost of rearing a child

Overall, the cost of raising a child can be very costly so parents are encouraged to prepare for it. Most of the time, the option that parents take is simply to have one of the couple give up their career to stay at home and care for the children. This may seem impossible given the high cost of living but with a little preparation, you can actually make it work without feeling too deprived while living on a very restricted budget.

A website called TheMomiverse.com provided some statistics about the general costs that parents face in child rearing.

  • The cost of raising a child until they are 17 years old costs $234,900.

  • 74% will cut back on their usual budget to afford buying baby items.

  • 13% will buy less than what they intended for baby items.

  • 37% feel guilty for the times when they cannot afford a baby item.

If you think that staying at home for the child is more rewarding for the child in the long run, here are some tips that we have for you.

  • For a year or a couple of months before having a baby, transition into a one income household budget. While the two of you are still working you can start living on one income so that the full income of the other can be put into your savings. This will boost your savings exponentially by the time the wife conceives.

  • Continue with the dual income right before the baby is born. This will allow both parents to take advantage of benefits offered by the company.

  • Do not buy any big purchases and just put the money in your savings.

  • Look for ways that the stay at home parent can earn from home. Remote work is ever increasing and this is one option that you can look into. There are a lot of stories of stay at home moms with successful blogsites that earn them on the side. It just started as their online journal and as it gained followers, they started earning through advertisements. This is something that you can look into.
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