Can you thrive and live well on one income in the UK?
What lead us to make the change to one income?
In February 2019, I was admitted to hospital with a mental breakdown as a result of acute stress. For a few weeks I was hospitalized, it really gave us both the opportunity to look at what mattered to us in life and the goal for some time had been to drop down to one income to look after our two young boys outside of their school and nursery life.
In the past before I was in hospital, we hadn’t believed it would be possible given the household budget demands and balances, but sometimes life throws you a curve ball in order to really see what you want to do.
As a result of leaving hospital, within a matter of weeks we had begun the serious discussions about whether life indeed could balance with just one income – my income as a full time working Mum and then topped up with my side hustle (this blog and youtube channel that supports it) income even though at the time it was very small.
Why did we choose my husband to stay at home instead of perhaps myself as the default?
Well that was simple too – my role in IT allowed for far more flexibility than my husband’s job in finance. I could work from home effectively a few days a week taking part in life whilst also balancing my roles as a Mother, where as my husband would have still required to travel for two hours every day in the office and have a 12 hour day away from the home.
The maths and time rewards heavily swung in favour of my working role continuing whilst allowing us to work out how to balance all the bills and life with one income.
How to live well on one income
2) Create an emergency fund before you make the switch to one income
Having a healthy emergency fund, ideally of 3-6 months of living expenses as you make the transition over to one income can help reduce anxiety about living on one income and less pressure on the routine working from the very first month.
This gives you some security to know that you have time to test the new system of income, and then if you feel you need to change back you have a buffer of money to allow you to do that.
3) Set a new “Bare Bones” budget
One of the most fundamental money management skills you need before considering moving from two incomes down to one is a basic bare bones budget is created.
This means essentially you have a written budget of total income and all the essential bills paid from that income, the absolute essentials in terms of keeping the roof over your head safely and food in your stomachs.
Any luxuries outside of that budget initially shouldn’t be added, but that basic budget will allow you to know if it is even possible to make that one income decision.
Know your numbers and even better – add 10% extra as a buffer into your basic budget for your ideal starter life with less working and more time together to give you more breathing room if bills change value in some months.
If you are looking for where to start on how to create one, why not check out my AutoPilot Money Spreadsheet system that allows you to budget electronically, calculate debt repayment models and even work towards sinking funds and money goals all in one place.
4) Start cutting costs EARLY before you move to one income
One of the first things we did during the years before we went down to one income was work on getting rid of all our consumer debt possible outside of our mortgage.
We wanted as much of our income to remain in our hands rather than to pay off past money decisions, and we decided to focus on paying down debt first.
Every bonus, every additional amount of money was thrown at consumer debt which included Credit cards and loans for cars.
In total we paid off around £38k of debt in some form including our car loans.
We now have those cars paid off in full and no debts, outside of our home mortgage, in our name.
This meant right away in the first month of living on our one income budget all the money could be spent on bills and real needs for our family today.
5) Run a “mock month” with only one income
If you feel inspired that this change is for you, one month have a “trial run” of having only that one income source as your total income for the family and live off it!
What would you do with your time?
How will you spend your money on what matters?
Can you do it and still have money left over to save and invest?
This was one of the best tips we could give you, as often people want to make big life decisions but forget to test how it will feel to live it.
6) Determine how you’re going to manage finances
Have an honest discussion about your roles with money and who will manage it potentially for the household.
I would suggest with regards to banking and everyday money, have one account and you must reach the mindset to see all money as household income only rather than one person earning it to then divide between everyone.
You can see how our family budgets and manages our money in my monthly “Budget with Me” Series on my Youtube channel. Here is an example one:
7) Plan how you are going to work together in the House for the new structure
So important is this step that really it will change how you live life together and one that you absolutely must consider before making any major life decisions.
How are you going to structure each partner’s role in the house and responsibilities moving forward when you move to a single income?
Will it automatically be one person’s responsibility to manage the children during a working week?
Will it be that one person will assume more of household duties or will you divide them between each other?
Will there be a priority for the income that is to be saved or invested every month, such as working towards home improvements or even financial independence goals instead?
Sit down and have that honest chat with each other about a typical week or month and how it will look.
Are you OK with the roles you might need to play moving forward?
Ideally all changes should feel right for your family, so don’t be afraid to try new things as an individual here and really see what is possible.