How to go from two incomes to one?

#1

The transition from a two income household to a single salary can be a bumpy one, especially with a newborn baby in tow.

It’s a scenario many new parents face, and one of the reasons we created our Baby Budget Calculator. It’s also a great example of an experience that can be made easier by gathering tips and tricks from those who’ve done it before.

So, what are your top tips and best advice for overcoming this challenge with your budget (and sanity!) intact?

To accompany the tips below we’ve also put together a blog about the different kinds of financial support available to families with young children - read it here.

Financial support for new families
#2

One place to potentially save money is if you have two cars - downsizing from two to one might mean you have to plan a little more in terms of transport (though if you live in an urban area there’s potential to use buses, trains etc.) but you’ll save a fortune on car-related costs. Selling the second car will also give you a nice little return to put away for a rainy day!

The main thing I’d recommend is trying it out (living off one income) for awhile before you actually have to do it, if you can. It’ll give you a bit of leeway to make the changes you need to make gradually, rather than finding out about the challenges as you go along!

Another thing that I was recently chatting about with a friend in Australia was not to forget about retirement savings for the person who’s staying home. In Australia superannuation is 9.5% of your pay, and so the person who’s not working can majorly miss out if the main income earner doesn’t top up their super while they’re at out of the workforce. Definitely something to keep in mind, as retirement savings for the future can go out the window when you’re trying to make ends meet in the present.

#3

The biggest saver is to meal plan and pack your lunch (make it for those who work / are at school). You minimise supermarket trips, avoiding potential temptations and budget overruns.

Plan the weeks meals on a Sunday afternoon, get the family involved if you have other kids, and come up with your ‘shopping list’ from there - then when you head to the supermarket stay focused and only get what is on the list - this will be hard the first few times. Have a mix of recipes your family loves and add a new one for variety. Once you’ve done this a few times it becomes very easy to do. Have a ‘staples’ list on the inside of your pantry which serves to jog your memory on the regular items you purchase like flour, washing powder, toilet paper and milk etc to ensure nothing is overlooked when you make the supermarket trip - thus avoiding an unnecessary trip if possible.

If you pack your lunch / prepare a home cooked meal 4 times a week you can reward yourself with a bought lunch / takeaway dinner every now and again - the 80:20 rule at play.

Lastly, when you do prepare your food, make double and freeze the extra - it can be super handy to have ready made meals in the freezer, ready to defrost and reheat, for when your newborn decides they want to be held and your dinner-making plans slip away!

#4

I was dealing with a partner who wasn’t good with money (the reality of the financial strain hadn’t hit him yet)- so it was really me that planned ahead. We planned on me taking 6 months maternity leave as things were already tight. I saved every cent I could spare throughout my 9 months of pregnancy (I found out really early). I paid off any debt I had lurking around and made sure all bills were up to date before my due date. I used the 4 weeks of maternity leave before baby was due to cook, prepare and freeze meals so there were minimal food expenses at first. I stocked the pantry full of essentials (flour, oats, sugar, coffee etc).
I divided up a portion of my savings to pay myself an allowance each week to live off for personal use. I took control of my partners income, wrote a budget  of things that needed to be paid (rent, petrol, bills, food, savings) then he got a small amount leftover for his personal use.
Food shopping each week entails me mulling it over all week before doing the weekly shop on a Sunday so food is fresh for the week. I often ‘window shop’ online at Countdown so I can see exactly how much I’m spending and what I’m buying before heading to the supermarket. We eat alot of mince meals as it goes a long way (and can be bulked up with veges, oats etc to make it stretch further). We often eat leftovers from dinner for lunch the next day too.

We did all our baby clothes/furniture.essentials shopping on Trade me or on second hand pages on Facebook - nothing was bought new. I stoked up on Infant size nappies (as bub may grow out of NB quickly and many will go unused) and wipes.

Anytime we have a date night or an outting I will use coupons. Checking out the daily deal websites (Grabone, Groupon) are excellent for finding 1/2 price meal deals etc. It also pays to check these websites if we need car maintenance or something done to the house (carpet cleaning, something fixed) as there’s always all sorts of deals going.

We switched to a prepay power company (Powershop) so I can monitor our daily power usage and pay in advance or when we have spare money. There are also power specials up for grabs on occasion and our power bills have dropped significantly. Its like a personal challenge to bring the usage down, I check it each day!

We top our vehicles up with petrol once a week, I try walk to the shops when I can or try do several errands in one hit so I’m not heading out all the time wasting petrol.

All my accounts are with BNZ and I have an account for everything (His acc, my acc, baby acc, bills, food, savings, credit card). It makes it easier to track incoming and outgoing expenses. Each week the same amount is divided into those accounts. Any money leftover at the end of the week goes straight into savings.

I’m basically frugal wherever i can be!! Things are listed and stuck to the pin board so we both have a clear visual of our budget and what expenses we have each week :slight_smile:

#5

Talk to your bank about switching your mortgage to interest only for an agreed period of time. If you feel like your finances are going to be too tight and could cause you stress then moving to interest only will reduce your mortgage payments. This will give your budget a bit of breathing space while you are attending to more important things, like your new baby!