Can You Afford to Live on One Salary?
In addition to making ends meet, be sure you don't give short shrift to your long-term goals.
Question: My wife and I are expecting our first child early next year, and my wife would like to quit her current job and take care of the baby when he/she arrives. We think we can make it work, but we want to make sure we're thinking through all of the financial implications of living on one salary. Any tips?
Answer: First, congratulations on your impending arrival, and kudos to you both for thinking through all of the implications of this important decision. As with any budget question, the decision to go down to a single salary might look eminently doable on paper, but making ends meet on one paycheck could be more difficult in practice. You also need to assess how this decision will affect your long-term goals: If just one spouse is earning a paycheck, will that impede your ability to sock money away for retirement and college? How about your spouse's prospects for re-entering the workforce at a later time?