One spouse or partner suddenly loses a job, or someone is laid off and unable to find work, as in the Global Financial Crisis of 2008. You’re used to being a dual-income household, and now you’ve become a single-income household. Learn how to cope with this unexpected emergency situation.
There is a lot in this article. I’ve tried to put it in order of what you will need based on urgency. Don’t try to absorb it all at once. Do the most urgent tasks first, then come back and get some more ideas. I’ve even included some relevant free printable worksheets to make it easier for you!
You can do this. I speak from experience. Coolly and calmly, you can be very intentional about where your money goes and what steps you can take to improve the daily life of your family.
Your Battle Plan
You need to take concrete financial steps to work out your current situation and plan the future as best you can.
Allow yourself to get over the initial shock
• Give yourself a little time to settle down a bit…chat to your partner…
• Decide what you’re going to say to the kids so you can put forward a united front.
• Find a notebook or exercise book. Over the next weeks and months you’ll be writing down helpful information and you want it to be all in one place, easily accessible, and easy to carry. If you don’t have a notebook available, how about a folder or an envelope to keep everything together?
• Keep your notebook or exercise book close to write down random thoughts. Once you write them down, you can dismiss them from your mind.
• Have a nice dinner and a good night’s sleep.
• Awake refreshed, ready to work out your battle plan.
Call a family meeting – prepare your kids for a (short-term) life with one paycheck
• Let your family know the situation; I’m sure they already know that something is going on.
• You and your family will get through this.
• Tell them that you and your partner are going to make a plan for the near future, and you will tell them all about it when it’s worked out.
• Ask for patience, understanding, and flexibility.
Have a meeting with your partner (with pen and notebook)
Here is a starter list for your necessities. Do you need to add anything?
• A place to live
• Transport for the person who is going out to work
• Transport for the kids to school
Financial questions to ask
• Are you expecting any residual income from your job?
• Are there any government benefits you can apply for?
• How much money is in the bank?
• How much money is in both of your wallets?
• How much credit do you have on your credit card?
• Can you adjust the tax withholding for the partner who works outside the home? You may now be in a lower tax bracket. Maybe check with your accountant or tax advisor.
• Will it save money if the stay-at-home partner looks after the kids? Are you able to break that commitment or is it a month-to-month setup? Will you be able to put the kids back in there when you get a job? Would your family be able to help with childcare if not?
• Is there anything you can cancel? Vacations, trips, big or long-term purchases?
• Last resort: would anyone in your family be able to give you a short-term loan as a cushion?
• When is your rent or mortgage payment next due and how much?
• What debts do you have, including your credit card debt?
• When is the next payment due and how much?
• When are your utility bills due and how much do you expect them to be?
• When are your insurance payment(s) due and how much?
• Are there any childcare bills coming up? When and how much?
• What subscriptions do you have that you can suspend or cancel?
• What other bill payments are coming up and when? Think car expenses, phone, cable and internet, school expenses pet expenses.
• What are the transportation costs for the person going out to work? How much per week/month?
• Consider the effect of the lack of a second income on your health insurance
• Review your cell phone plan
• Consider opening a spousal IRA for the home parent
Phone calls to be made
Your creditors will be much more willing to assist you if they know the situation as soon as possible. If you wait until you have no money in the bank, they may not be so tolerant.
Call the people listed below (and they are people) and tell them what has happened. A lot of utility and other providers have “hardship” departments who can give you alternatives.
Tell them your financial situation and ask their advice.
• Maybe you can miss one or two repayments?
• Maybe you can be put on the cheapest possible plan?
• Maybe you can suspend the service temporarily?
• Can they suspend late payment fees?
Allow 1 page of your notebook for each entity.
Note the following:
• Name of business
• Phone number
• Email address
• Date you called
• Name of person you spoke to
• The rest of the page is dedicated to their advice to you and what action you need to take.
Here is a printable phone log worksheet you can use if you wish when you make your phone calls.
1. Landlord or mortgage provider
2. Debt providers
3. Credit card provider
4. Childcare provider
5. Electricity supplier
6. Gas supplier
7. Water supplier
8. Phone company
9. Internet company
10. Cable company
11. Streaming company
12. Ask your accountant if you should adjust the tax withholding of the person working outside the home and if there are any tax credits that you can claim now.
13. Insurance company: can you increase your deductible to reduce the monthly payment?
Is there anyone else that needs to know about your circumstances and may be able to make things easier?
Create a budget
I know a budget sounds boring, but a well-researched and realistic budget can form a roadmap so you know how much you need to keep in mind and how much you can spend.
It’ll reduce your stress to know you are taking control of your finances as you make this transition.
Look at your bank statements and credit card payments for the last 12 months
This task would be much easier if both of you are involved.
• Work out a list of spending categories that make sense to you. You can download the standard budget worksheet mentioned below to get some ideas.
• In order to catch all of your regular payments, you’ll need to look at the last twelve months of expenses.
• Add each expense to the relevant spending category. One of you can call the numbers and the other can enter the numbers into a spreadsheet or on a piece of paper ready to be added up.
• Note those expenses that only happen once a year and might be missed. We’ve got a clear and simple printable worksheet for you to record your annual expenses.
You’ll finish up with an annual figure for each of your selected categories.
Work out your new standard budget
I prefer to create my standard budget based on my pay cycle. When I get paid, I add my new allocation from this pay to what is left in each category from the last pay. Where I work, I am paid fortnightly, that is once every 2 weeks.
But you can base your standard budget on whatever cycle you wish.
• If you wish to work out a monthly budget, divide your annual figure by 12.
• If you wish to work out a 2-weekly (fortnightly) budget, divide your annual figure by 26.
• If you wish to work out a weekly budget, divide your annual figure by 52.
I’ve created a standard budget worksheet for those first few days and weeks. You can enter your annual expense figures, divide them to get the budget cycle that you prefer, then make cuts so that your total standard budget is equal to the single income.
It’s 5 pages long, but it’s got enough room to write comfortably, plus I have added extra lines for expenses in each category that apply to your life.
I hope you find it helpful. I wasn’t able to find a printable on the internet that achieves the present budget progressing to the new single-income budget, so I created my own.
Outgoings to cut out
The sacrifices listed below don’t have to be part of your budget forever, but we are talking about an emergency situation here. Your priorities are somewhere to live, food, utilities, insurance, and transport for both the earning partner and the kids. There will be adjustments and some lifestyle changes as you transition to being a single-income family.
If you’re reading this during COVID-19, these choices may already be made for you…
• No new clothing
• No eating out
• No takeaways
• No gymnasium
• No hairdresser visits
• No movie theaters
• No gifts
• No outings, unless they are free
• Do you really need two cars?
• What about carpooling?
• No expensive vacations
• Cut down on your vices, such as tobacco, alcohol, and especially gambling
The eating out and takeout savings can go to homemade brown-bag lunches for the kids and the earning partner and some inexpensive little purchases to help you with your new life. For example, a travel coffee mug, drink containers, lunch boxes, or bags. Also, enticing ingredients to make the lunch edible are also helpful to make brown-bag lunches successful. You can make some gourmet coffees for your partner so he or she won’t need to purchase any expensive convenience beverages.
Outgoings that are tempting to cut, but DON’T do it
There are some expenses that seem like dead money where it seems like you’re paying for nothing…I know the feeling! But these types of expenses protect us from big and crippling bad-luck costs.
I include in this type of expense: insurance coverage, including life insurance, and all of the health items, including veterinary visits.
Outgoings that become savings
There is some good news about going from two incomes to one. For the home spouse, there will be cost savings:
• No fuel or commuting costs
• No bought lunches
• No expensive convenience foods
• No bought coffee
• No work clothes
• No memberships, licenses (unless you need to keep them up)
Other budgeting considerations
• Be realistic with your calculations
• Leave a little “family-friendly entertainment” money in the budget; ask your family what they vote for.
• Some savings plans may need to be put on the backburner, but it’s not forever. When things get better, you can add them back in.
• It might take a few tries before you get your new budget correct for your family, but it will be worth it because you will be in charge of your finances, not the other way around.
• Be kind to yourselves; this doesn’t necessarily cost money. Have a weekly date night.
Added benefits of having one partner at home
I’ve referred to you as the “non-earning” partner, but you will be making a big contribution to your family’s future by supporting the “earning” partner. I very carefully did not use the phrase “working partner” because both of you are still working and contributing to the household.
You’re both earning the family’s income, it’s just that one partner goes out to do that and one is the home parent.
You are running the household:
• You can enlist the kids to help with chores (age-appropriate of course)
• You can make brown bag lunches for your partner and kids
• You can plan the meals and use your pantry and freezer to get the best out of them and ensure there is no food wastage
• You can have dinner ready to go when everyone gets home
• You can use your time to do things that normally cost money, for example, make your own ingredients and other groceries, collect relevant coupons and seek out good discounts and deals, plan a detailed shopping list to be the most cost-efficient possible.
• You can organize the laundry and other household tasks and ensure that you save power to reduce your electric bill and also save water.
• You can start a small vegetable and herb garden to provide fresh food. Can you have a few chickens where you live?
• You can strive to make your household the most self-sustaining that it can be in this world.
• You can keep track of expenditure; keep a list of items you can claim in the tax season as you go. If you’re prepared, you’ll get your refund much faster.
Find a side hustle or part-time work for some extra cash
As well as looking after the kids and the house, the partner at home could spend part of their time earning some money online or in the neighborhood. Start small and build up. Even $100 per week would be helpful to start an emergency fund.
Neighborhood income ideas
• Babysitting or daycare, since you’ve got the kids at home anyway
• Sell eggs from your own chickens
• Tutoring the neighborhood kids
• Washing cars
• Mowing lawns
• Walking dogs
• Checking on houses and pets while neighbors are away
• Sell your old books, clothes, and toys on eBay
• Direct sales (remember Tupperware?); have a party where you earn money after the kids are in bed, try to pick a product that people will need to buy more than once.
Side hustle ideas
Places to go to get help
There are a lot of good websites that offer free assistance. Search the internet for these services as a start. I’m sure you can think of other searches to help with your short-term situation.
• Start with your government’s websites
• “free financial counseling”
• “food charity”
• “job assistance”
• “school supply charity”
Remember, this is only temporary.
Look after yourself, communicate with your partner and children, be patient and you’ll get through this.