Two Parents, One Salary: How to Make a Single-Income Household Work in 2021
Many parents choose to let one person's career lead their household earnings. After all, deciding for one parent to stay home can seem like a no-brainer when faced with the rates of burnout in corporate jobs, the emotional pull of a new baby, and of course the astronomical costs of child care. With national infant care costs as high as $20,000 per child per year in most cities, it's no surprise to hear about a New York City family paying $50,000 per year. And that figure can pale in comparison to the financial burden of raising multiples, children with special needs, or even just parenting with an unpredictable work schedule.
Hence, some parents decide it would be best for the household as a whole for one parent to ditch full-time employment. The practical decision can feel easy, but many (rightfully) may fear taking the leap to survive on a single income.
Here's how parents who are raising a family on a single income make it work.
Overcommunication is key.
A major fear for stay-at-home (SAH) parents is feeling silenced by financial dependence. Seasoned single-income families say that the antidote to that feeling is talking about money—and plans that require money—early and often. Neisha and Troy are avid over-communicators.
"We understand each other's intentions and expectations and can not just look at the numbers but also discuss what it means to us. Everyone has baggage when it comes to money and different notions they grew up with. Everyone is a saver or a spender. Everyone has their financial fears. We had the best pre-marital counsellor that made us have these discussions up front so we know where we stand and how to tackle things as they come up," Neisha offers.
These are the same tools and tips that couples can acquire in marital counseling or apply in self-coaching. It's never too late to ask your partner how they feel about debt—or to have a conversation about the kinds of things they learned from their parents and caregivers. Communicating about general money feelings and habits can be a lot less charged than discussing why a coveted item will throw you over budget. Couples that normalize talking about money matters seem to strategize around compromise, which makes both parties feel heard and have less animosity around their single-income arrangement.
Know the difference between sacrifices and priorities.
Although there is a fine line between a sacrifice and a priority, the difference can lay in the timing of the decision. Priorities are mutually agreed upon and decided before the choice ever comes up. The feeling of sacrifice, on the other hand, might be strongest in response to a purchase that one of you values much more than the other. Toni and Marinela say their sacrifices are few because their priorities are clear: "We generally have the same priorities: education and the kids first; everything else after that. We are very fortunate in that we don't have to make trade-offs for the necessities."
"As parents, we try to demonstrate a culture of budgeting, saving, and only purchasing items that are truly needed or will bring lasting joy. We've always cultivated a less-is-more lifestyle and we prefer money saved over things bought," says Lisa, a logistics manager at a biotech company, of herself and her husband Steve, a healthcare operations manager. They decided to live on Lisa's salary after welcoming a baby girl. Steve has been a stay-at-home dad since September 2018, and while "things are tighter than when we both worked, it has felt worth it for our family," confessed Lisa. "What we've lost in income, we've gained in time spent together."
Your partner is your teammate, not a competitor.
Anyone who has had to get up before the crack of dawn to commute to work knows the vitriol that can swell as you see your spouse snoozing peacefully in bed. Jealousy can easily creep in, making parents feel less like teammates and more like contenders. Perhaps Troy says it best when he explains how he and Neisha stave off resentment and envy: "We approach things, like finances, parenting, and any other big topic, as a team endeavor. And we've found that looking at things through a lens of 'us' and 'our family' has helped guide us through tough times, knowing that we are both invested in our success and happiness," he advises.
"Before we shifted to a single income, we would treat a bonus or a raise for one of us as something that was good for both of us (and now it's good for all of us)," Troy continues. "Since we've shifted, Neisha has continued this generous habit of sharing her bonuses and depositing money into my account from time to time, which helps me feel appreciated and cared for. Gestures like that highlight the mentality that a win for one of us is a win for all of us."
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Move if you have to.
Families who have seen their single-income switch coincide with a move to a lower-cost-of-living city seem more content than those who are sticking it out in more aggressively priced areas. Luisa, for example, was a social worker before becoming a stay-at-home mom five years ago—and as her kids get older, she feels like her husband's sales salary alone is not enough to build savings, so she's considering relocating.
"I have felt forever that the only way this is maintainable, if we want to live the lifestyle we enjoy, is to move to an area with a lower cost of living," she explains. "We also want to buy a home, and that isn't possible where we live on our single income. Retirement accounts have to take into account both of us. Therefore, my husband needs to either work for longer or make more money. Moving could solve a lot of these issues, as we will need to spend less and can save more."
Neisha and Troy prove her point: As part of their move from New York City to Atlanta, Troy quit his marketing job. Neisha explains that they "chose Atlanta because I have family here and the weather, lifestyle, and cost of living were better for our small family. We live in a cute, walkable neighborhood in the city, in an apartment with amenities we couldn't afford in New York, like a pool and gym. But with the pandemic, our expenses dropped even more, since we weren't going out to eat, traveling, or shopping like we used to. Last year showed us how short life is, and how much we value experiences over things."
This arrangement doesn't have to be permanent.
The happiest couples seem to be those who think of this shift as temporary. Alana is a trained physician who took time off before residency to reduce stress and start a family after a series of pregnancy losses. After eight years as a stay-at-home mom, she's now started a business.
"Child-raising is intensely important, but it is also hard. Society places little value on it, it is difficult and not always self-fulfilling," she confesses. "I am inspired by Justices Ruth Bader Ginsburg and Sandra Day O'Connor, who both took significant time off to devote energy to caretaking activities. Then, they returned to their careers and were highly successful. While I don't need to climb to the heights of my profession, I would like to achieve a level of success that matches the effort I have spent on my career, the education I have attained, and the gifts I was born with."
Technology and e-commerce have made it much easier for Alana and her family to create new streams of income—without requiring both parents to re-enter the formal job market.
One very compelling reason to go back to work is retirement planning; even high earners can struggle to save for two. Lisa, for one, remains deeply concerned: "I have lots of feelings about how unfair it is that stay-at-home parents cannot save for retirement via traditional avenues. Given that we live in a country that does not have a government-funded childcare program and that many areas struggle with childcare shortages, it is downright wrong that parents working in the home cannot build any independent security for themselves and their family's future. Our current strategy is for me to max out my Roth 401K every year and keep our fingers crossed that it will be sufficient."
Other parents have banked on investments in real estate and other dividends to cover elder care expenses—but many have plans to eventually go back to work for retirement security. So if you're planning to exit the workforce to care for children, make sure you also have a plan as to whether—or when—you want to reenter it, and how you plan to finance your future if not.