If you and your working spouse are looking to pay off debt, save money, or both, you might consider whether you can allocate one income to your living expenses and the other income toward achieving your personal financial goals. This can be especially effective for couples without children, but is applicable to most working couples. Here are a few things to consider:
- What are your goals? Are you trying to pay off student loans, a mortgage, or other debts? Or perhaps you’re saving for a down payment on a house or other major purchase, or looking to start a business. Discussing and negotiating these goals with your spouse helps to ensure you’re on the same page and working toward achieving them as a team.
- What lifestyle decisions need to be made? Even with two healthy incomes, it’s likely that you will have to make sacrifices to live on a single income. Can you reduce your expenses by moving into a smaller home or to a different part of town? Perhaps you can reduce the amount or distance you travel for leisure each year. There are likely numerous ways for you and your spouse to accomplish this.
- What’s the plan? Once you set your goals, it’s important to make a plan and set milestones. For example, “We will save X dollars per year for Y years, saving a total of Z dollars” gives you a set of concrete targets for what you hope to achieve. This can help energize you as you accomplish the milestones, but it can also provide motivation or encouragement during periods when living on a single income creates challenges.
- Stick to the plan, but stay flexible! If you’re diligently working toward one goal but other opportunities or conditions arise, you and your spouse may need to rethink your goals. And of course, if an emergency arises, you may need to dip into that second income. Just don’t make a habit of it. Whether you stick to your original plan or need to adapt it to the changing conditions, the initial planning and joint effort should provide you and your spouse with a strong foundation for moving forward.