Do Dual Income Families Need a Budget?
Unlike single income families, dual income families definitely have the advantage of extra cash flow. Dual income families also have a lower risk of managing the odds of losing jobs compared to single income families. But there is always the question – Do dual income families need a budget? In my humble opinion, the answer is Yes.
Why Do Dual Income Families Need a Budget?
When the combined gross income of your family increases, it is very natural to feel that you can afford more luxuries. There is nothing harm in adding a few luxuries but many times the dual income can make you feel that you can afford everything under the sky. Which eventually may lead to more debt for you to tackle and less happiness to enjoy the said luxuries.
When you transition from single to dual income lifestyle, it becomes easier to get loans and before you realize you are already making huge lifestyle changes. It’s hard to resist the offers you get like pre-approval for higher mortgages, financing for the new car, lower interest rates on the credit cards, etc. If you are not ready with a budget plan, you would be bitting more than what you can chew.
In the rat race of keeping up with the Joneses, we end up living paycheck to paycheck. We all have been there. Even the hefty dual income vanishes in the thin air and nothing is actually left to save or invest. Big homes with more rooms than the number of people in the family, brand new vehicles, overseas vacations, etc have become a necessity to prove our status. But wait who are we actually trying to please?
We buy things we don’t need with money we don’t have to impress people we don’t like.– Dave Ramsey.
Dual Income Families Need a Budget
Are you tired of waiting for your salary to credit every month? Are you caught up with the student loans, hefty mortgage, car payments, and other consumer debts? Do you have no net worth to show irrespective of the dual paycheck that you make as a family? Do you want to live a debt-free life? If you had answered yes to any of the questions above, then you better start budgeting your income.
I grew up in a dual income household and this is something that I learned from my parents.
Live below your means but within your needs.– Suzie Orman
My parents worked hard and budgeted every single penny. Unlike other dual income families, we didn’t have a big home or fancy vehicles. We went to public schools and used hand-me-downs. I always wondered how our relatives and friends with single income took those extravagant vacations. As a kid, I have even felt sad that we couldn’t afford the hi-fi lifestyle. But as an adult, I totally appreciate and learn from the simple lifestyle that our parents gave us.
My parents literally lived on one income while saving the rest for their retirement. Some working parents contribute to their kid’s college education, but my parents didn’t. They knew that saving for their retirement is critical than paying for their kid’s college tuition. Am glad they chose to save for themselves first.
Whether you are single/dual income family, it is best to contribute to your retirement bucket first and then tackle the rest. The last thing that we need is to be a burden to our kids at our ripe old age. The least we could do is to save for our retirement.
How to budget
There are free budgeting templates available on the internet. If you are new to budgeting, jot down all your income and expenses in a sheet of paper. There are 3 main categories that consume the majority of our income. Housing, Food, and Transportation. Apart from the recurring costs like mortgage/rent, insurance, and child care, see where you can cut down the expenses.
Start small and then eventually handle the bigger expenses. Cutting cable, taking lunch to work, brewing coffee at home, etc are the smallest steps that you can take. Granted these simple changes won’t make a big difference, but you can definitely see some extra cash left at the end of the month.
Slow but Steady Progress
Keeping the expenses lower than your income is the way to create the extra cash cushion. Well, that’s a no brainer. But the question is how to get there? The first step is to audit your expenses. Figure out the expenses which can you avoid. For the starters, we cut cable and changed our phone plan.
Lifestyle changes cannot happen in a single day. It takes time and effort. Cut the gym membership and other monthly subscriptions that you don’t use or enjoy. Use your local library for new books/movies. We started cutting down our expenses every month and after a couple of months, we switched from a fancy car (a big mistake of ours!) to a previously owned old vehicle.
Make thrifty choices and use second hand instead of buying new. Stop focusing on the Joneses and on what society thinks you should do. Instead, change your mindset to live a simple and meaningful life that you can enjoy without adding more “things” and accumulating more “debt”.
Everything seems hard in the beginning. Changing our lifestyle and cutting back on the luxuries are definitely not easy. But the end goal of “debt-free” life is so much worth the pain.
Do you budget your household income? What are your favorite frugal tips? Please share with us in the comments below.