Budgeting as If Living on One Income

When I was pregnant with my son, my good friend (I’ll call her Jessica) was pregnant with her second child. Jessica desperately wanted to quit her job and stay home to take care of her soon to be two children. The problem was that she and her husband both had good paying jobs, and they were used to the two income lifestyle—dry cleaning done every week, take out several nights a week, vacations a few times a year, lunch out nearly every day, monthly video game purchases, etc. She and her husband didn’t budget; they just spent until the money was gone. (They did not, however, ring up credit card purchases.)

I suggested to her that she and her husband try to live on just his salary for about 6 months and save her salary to get a good savings built up and to see if they could manage to live on one income. Jessica agreed that was a good idea but said that they were not financially able to get by on just his income.

She did indeed end up quitting her job when the baby was born, and they moved 500 miles away to live closer to relatives. They sold their house and, thanks to selling right before the market crashed, they made a tidy profit. The area they moved to had a much lower cost of living, so they were able to buy a house nearly double the size of their old one for the same price they sold the old one for. They did not put all of the profit from the old house on their new one. They used some of the money for things they had always wanted such as a home gym and Lasik surgery for both of them.

The first year she stayed home was fine, but the second year they began to struggle. By the third year she was hitting the job market even though she had wanted to stay home until her youngest was in first grade. However, their bills were piling up because they continued to live as if they had two incomes coming in.

I do not want to have the same experience that Jessica had, but I can see how easily it can happen. So, starting this month, my husband and I are working on a budget that reflects one income. Unfortunately, his is the lower income, but it has the potential to increase in the next several years if he is able to focus on his career. I am lucky to have a leave of absence from my job that is paid from August through December. We have already made plans to have all that money directly deposited in savings. Out of sight, out of mind. So, here is our budget for August. There are some cuts made since last month’s budget, and I expect to cut it further in the next month or two as we adjust.

Laundry $60 (this is up by $20 to reflect switching to cloth diapers for the month)
Rent 1000
Groceries 220
ComEd 50
AT & T 28
Comcast 95
Son’s school 187
Hubby’s spending money 35
My spending money 35
Misc. 50
Gas/Transportation 130
Restaurant 80
Entertainment 40
Student Loan 192
Life insurance 77
Tithes Private
Total $2279

I’ll report back and let you know how I did at the end of the month