Planning to live off one salary?

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willyfones

Registered User
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39
Age: 36
Spouse’s/Partner's age: 34

Annual gross income from employment: 46,000
Annual gross income of spouse: 40,000

Monthly take-home pay: 5350 pm total

Type of employment: Both PAYE

In general are you:
(a) spending more than you earn, or
(b) saving?

We never like to borrow and never have (apart from mortgage) breaking even a bit for the last 2 years with doing up our house and having a child.

Rough estimate of value of home: 555k
Amount outstanding on your mortgage: 220k
What interest rate are you paying? 3.1% with KBC 927 per month

Other borrowings – car loans/personal loans etc
None

Do you pay off your full credit card balance each month? None


Savings and investments: 12k savings in Credit Union.

Do you have a pension scheme? Two DC pensions about 5 – 6 % contributions maybe 20k in total in both.

Do you own any investment or other property? No

Ages of children: 1 two year old

Life insurance: Joint mortgage protection, Health Insurance,

What specific question do you have or what issues are of concern to you?


We pay 600 euro a month childcare (and this is only for 2 days a week) we have a relative minding for the other 3 days. But we would like to have another child so this will rise to maybe 800 plus a month or more.

I have been thinking maybe it would be better if we drastically cut back on our expenditure and try to live off one wage for maybe the next 5 years. I was thinking I could save maybe 8k over the next year and a half. Then bring our savings up to 20k and drip feed this into our expenditure over the 5 years.

Both working – 5350 per month or 1230 per week

Single working – 3170 per month 730 per week plus savings (807 per week)

How can I financially plan for something like this to see if it is viable? We both would love to have our child and future child minded at home. We obviously would have to drastically cut back on our spending.
 
I would start by looking at alternatives to your current paid childcare. €70 per day appears extortionate.
 
Also the relative who currently minds one child, 3 days a week, may not be willing to mind two.
 
willyfones said:
How can I financially plan for something like this to see if it is viable?
Click to expand...

Is there anything stopping you from trying this now in advance of having the second child? Put all the second wage into a savings account as soon as it comes in.

It does seem as though you'll be on a knife edge and any financial shock could be a problem.
 
I know of friends of mine who loaded all the tax allowances possible on the “working spouse” and saved all the earnings of the “hoping to give up work spouse” aside from child care into a saving account. They used this money to save for big ticket items, furniture, cars, holidays etc so they got a feel for what they would loose out if one partner gave up work.

You could also save on one car and not two possibly, and the partner at home would probably have more time to shop for cheaper food and cook from scratch which would save money, but it would need to be a determined effort for the stay at home spouse to work hard to make the income work for the family. The working partner should probably leave the money management to the stay at home spouse so that every day spending can be planned sand controlled.

With both partners working they are time poor so a sea change would be needed to have one partner stay home.

Plus you need to plan and budget for emergencies.

Best of luck
 
My wife gave up work a few years back to be a full time mother (is that the phrase?!) to our two kids and some things I learned over the years:

- Running two cars is costly. Insurance\tax\servicing\NCT\baby seats\break downs\fuel\tyres. Its a big difference from running your own car
- There is more electricity and heating bills as the house is occupied more or less all day every day
- Bit more wear and tear about the house with kids running riot from time to time
- Kids need to be entertained from time to time so there will be more expenditure on play centres, pet farms and eating out
- While its mothers best intentions to save on groceries I find its hard to say no kids all the time when they are also in the shops looking for toys, books, magazines (dont get me started on Match Attax soccer cards!)
- To give you an idea my wife spends €1500-€2000 every month which excludes the mortgage and bills. And I know the spends, its all normal and fairly necessary. There is the odd really bad month where it was €3200 (we replaced blinds in the house, the gas boiler broke down, the oven broke too, her car was due a service and NCT, the school fees were due, the kids needed clothes, there were 3 birthdays to go to etc etc etc).
- Grocery bills are a big spend, no matter how you try to go to Lidl\Aldi etc we end up sometimes in Tesco and Supervalue as I think the quality of some things are much better there.

But I wouldn't change it for the world, and my wife giving up her job to mind the kids is the absolute best thing we ever did. They really benefit as do I. Just be prepared, its a big hit financially.
 
Thanks for the replies,, I think its a good idea to put the second wage into savings to test the waters.. unfortunately, on paper it is looking too tight at the moment.

Basically, the relative could not be expected to mind both kids,, thats part of my concern. I estimate full time creche for two kids will be about 1700 -1800 per month so in theory my wife would only gain an extra 450 or 550 euro or so per month by working full time.
I accept it is our choice to have or not have another child, I might save like mad for the next 12 months and see how we get on.
 
You say your wife would gain about 450 to 550 if she works full time. However some of that money will be spent on work expenses such as commuting, clothes, contributing to gifts for colleagues, maybe lunches or coffees, etc. So really the net gain to the family would be smaller.

Is part time work or job sharing an option? That might be a good compromise.
 
aristotle said:
Running two cars is costly. Insurance\tax\servicing\NCT\baby seats\break downs\fuel\tyres. Its a big difference from running your own car
Click to expand...

Not sure I fully get this point.
In general is it that with 1 working the stay home spouse needs the second car and that its assumed previously they only needed one car because drove together to work?
How true is this assumption e.g what about public transport , are they really working in same area
or have i misunderstood the point ?
 
Point is when you previously just paid for your own car you now have to take up the costs of your partners car as well out of your single salary, just making a simple point that those costs can be high and easy to overlook.
 
And don't forget that when your spouse returns to work, she might not be at the salary level she would have reached had she continued to work.
Since there isn't a lot of difference between your respective salaries, would it be possible for both of you to work part time ? That might allow both of you to continue to keep up with things in your work area and not to have to start at the beginning again in a few years.
 
A couple of things not mentioned:
- Your 2yr old should be approaching age for ECCE, so there may be some benefit to savings made there, or helping with the hours that family members already cover. Most creche also do discount for additional siblings, so your estimate of 1700-1800 sounds high taking these into account.
- Does the employer pay any additional maternity benefit? Obviously would make sense to work up until that point and ensure to take advantage.
- Returning to work, there is additional unpaid leave available for mothers, so her job could be secured for a number of months after the birth, on the basis that it may prove difficult or want to change her mind and return to work. Also, whether a sabbatical was available again to try and protect the job and earnings level if/when she wanted to return.
- Home Carer tax credit, eur1200 per year, this should be available. Also, to factor in the additional child benefit +140/month

I'm in a similar situation and my wife and I debate this constantly, and the bit it comes down to has been mentioned above:
aristotle said:
But I wouldn't change it for the world, and my wife giving up her job to mind the kids is the absolute best thing we ever did. They really benefit as do I.
Click to expand...
The dilemma is what value to put on that.
 
You have to consider pension for the person not working.
Also their loss of career advancement, and if they will struggle going back to work.


aristotle said:
My wife gave up work a few years back to be a full time mother (is that the phrase?!) to our two kids and some things I learned over the years:

- Running two cars is costly. Insurance\tax\servicing\NCT\baby seats\break downs\fuel\tyres. Its a big difference from running your own car
- There is more electricity and heating bills as the house is occupied more or less all day every day
- Bit more wear and tear about the house with kids running riot from time to time
- Kids need to be entertained from time to time so there will be more expenditure on play centres, pet farms and eating out
- While its mothers best intentions to save on groceries I find its hard to say no kids all the time when they are also in the shops looking for toys, books, magazines (dont get me started on Match Attax soccer cards!)
- To give you an idea my wife spends €1500-€2000 every month which excludes the mortgage and bills. And I know the spends, its all normal and fairly necessary. There is the odd really bad month where it was €3200 (we replaced blinds in the house, the gas boiler broke down, the oven broke too, her car was due a service and NCT, the school fees were due, the kids needed clothes, there were 3 birthdays to go to etc etc etc).
- Grocery bills are a big spend, no matter how you try to go to Lidl\Aldi etc we end up sometimes in Tesco and Supervalue as I think the quality of some things are much better there.

But I wouldn't change it for the world, and my wife giving up her job to mind the kids is the absolute best thing we ever did. They really benefit as do I. Just be prepared, its a big hit financially.
Click to expand...

I agree with this. There is a huge hit financially.
 
What happens if your wife hates being a full time mother. What if she resents never having any time off. What if you resent her spending your money. Or she feels guilty spending it. Being at home and being expected to penny pinch in order to do so is bound for trouble.
 
Mrs Lep had to give up work on marriage (we as a nation don't need to return to those days). She sacrificed her independence for our children. My independence suffered to as we hadn't a bob with one salary. Were we thanked for it? Pass the bucket swiftly from the left please.

Keep the two jobs no matter what the price of childcare etc. Two incomes beats one everytime. Anybody who tells you different ain't doin' you a favour.
 
If I had to do it over I wouldn't go down to one salary again. In think families with two people working have a better life work balance.

Take something as simple as running a cheap second car. They've made this more expensive than running a new car. Excepting depreciation.

You hit that kind of stuff all the time.
 
AlbacoreA said:
In think families with two people working have a better life work balance.
Click to expand...

Interested in this, how do families with two working have a better life\work balance?
I would have thought that its better with one working given you have one person spending less time working\commuting therefore they can fully focus on the life part?
 
Bronte said:
What happens if your wife hates being a full time mother. What if she resents never having any time off. What if you resent her spending your money. Or she feels guilty spending it.
Click to expand...
Simple, she doesn't give up her job. Nobody is forced to do anything here, why do you think they are? The OP is simply trying to calculate the financial side of such a decision.

Leper said:
Keep the two jobs no matter what the price of childcare etc. Two incomes beats one everytime. Anybody who tells you different ain't doin' you a favour.
Click to expand...
This is oversimplifying things Leper. The amount of the income plays a major role in the decision.
We made the decision for MrsBeag to stay at home (Bronte it was a mature conversation between two adults with both parties coming to an agreement without any pressure!) and we're delighted with the decision. She loves being at home with the kids (she has no intention of returning to work any time soon) and we had put in place a plan around finances to ensure that neither of us felt either beholden to or controlling over the other. We have reviewed it annually since it began and tweaked it as suited the situation at that time.
Sure there were sacrifices made but ultimately it is a decision that worked well for us.
I should note that we are in a more fortunate position in terms of income compared to the OP so I'm not saying the OP should go ahead with the one income approach here, simply saying that the blunt statement from Leper is not true for all couples.
OP as others have said, a good approach here would be to try it out for a year in terms of putting the money from your partner aside into savings and see how you manage on one salary, before you come to any final decision.
 
Similar circumstances to @Ceist Beag
We've been a single income household for 5 years, and it works for us (and we had the mature adult conversation too).

Different financial circumstances, so I won't pretend to understand trying to get by on 46k a year. There is some good advice earlier in the thread - the one thing I'd say is you might see if there is anything you can do to increase your salary. Cutting costs will only go so far, and it'll take sarcrifices to achieve.

If part time is an option for one spouse (particularly once oldest starts ECCE scheme) have a look in the Tax forum at this thread: https://www.askaboutmoney.com/threads/how-much-can-a-spouse-earn-before-paying-40-tax.204950/

I wish you the best of luck.
 
aristotle said:
Interested in this, how do families with two working have a better life\work balance?
I would have thought that its better with one working given you have one person spending less time working\commuting therefore they can fully focus on the life part?
Click to expand...

With more money you have options. With less money you have less options. If the budget is very tight you will have no options.
With a family you end up with all sorts of unexpected expenses. You simply have less ability to cope with this, on a reduced income.
You could get lucky and have no unexpected events. But if you do...
If you have a high single income then its less of an issue either.

But I think the OP budget is too tight for what he is planning to do. If either partner takes on extra work then your free time is gone.
 
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