Thursday, August 07, 2008

Family income with kids

I found myself thinking about what life is like on one income based on a book Heather checked out of the library, a conversation at work with a friend, and chatting with another coworker and my cousin about their part time jobs. Finally, Dave Ramsey has been asking for what people do to earn extra money as stay at home parents and will have a show on it. All of this has occurred this week, and has had me thinking about what life is like on one income.

I think the first question is normally can people afford it. If you have researched the subject, you will hear many people talk about the hidden costs of working and sending your kids to daycare. Doing some searching, I found this "Second Income Calculator", which is supposed to help you figure out how much you are really making or saving paying for childcare.

Whether the second income from the father or mother results in additional income or not, it may mean you are living off less income either way. The DINK (dual income no kids) lifestyle is great but can lead to higher expectations of lifestyle after kids. No one wants to lose the luxuries we enjoy after having kids. But, whether you keep two incomes or one income, your lifestyle must change unless you either:
1) Increase the incomes significantly in one year
2) Live on less than one income before kids

In the end, cutting back will probably be necessary. Sacrificing is necessary. Otherwise, you may end in heaps of debt.

The good news, as I pointed out to my friend, is that later as your family income grows you can easily begin budgeting in the luxuries you used to enjoy again. You can get digital cable again, get an iPhone or something better later, and re-add those services you are losing out on now because you have learned to live on less.

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