How to make a smooth transition from a double income family to a single income one
Posted by: Arti Bhargava on Jul 09, 2018, 06.30 AM IST
To take care of her ailing parents, Kriti has decided to take a sabbatical from her high-paying job. This would leave her husband Manish as the family’s sole bread-winner. Though they have some savings, they have not been very systematic about it. Manish’s parents are dependent on them. They are servicing a home and car loan. How can they make a smooth transition from a double income family to a single income one?
Kriti and Manish first need to make a budget. They have to list expenses under three heads—those that are essential, those they can cut back on and those they can avoid. This will give them a fair idea of how they can manage with a single income. Some expenses that were essential when both were working, such as maintaining two cars, can be cut back on. Discretionary spending on movies and outings can also be reduced.
They also need to build an emergency corpus by diverting one of their incomes towards it. This will not only help create a fund but also get them used to living with a lower disposable income. The couple must develop good credit and spending habits by paying off expensive debts, cutting back on credit card usage and avoid using the revolving credit facility.
They should not compromise on any contributions they make towards their long-term goals, else they will miss out on the compounding benefits of time. A low-cost term insurance for Manish is a must as is health insurance.
For Kriti, it is not going to be easy to move from being financially independent to being dependent on her husband. If she can create a fund for herself, it will be useful when she may feel low about her non-earning status. She should also use this break to reskill herself.