How to Adjust to Becoming a One-Income Household

Happy mother talking to her small son while packing his books into a backpack.

Losing household income can leave your head spinning. Whether your spouse or partner has been laid off, quit their job out of necessity, or had their hours drastically reduced, you might not know how you'll get through it. You may have a million things to do and bills to pay, and yet feel overwhelmed about where to start.

But don't fret or make rash decisions. You have options, and can work with the members of your household to come up with a clear plan.

Cutting Your Expenses

With less cash coming in, you'll probably need to cut your expenses fast. If you don't already have one, you can start your preparations by creating a budget. It doesn't have to be anything complex, just a list of all of your expenses and income. A budget will help you to know exactly how much money comes in each month, where it goes, and what kind of changes you might need to make.

Here are some tips for effectively reducing your budget:

  • Start with your biggest expenses. If you're focused on cutting back small expenses, like coffee or the occasional manicure, you're not likely to find much breathing room. Instead, start by determining how you can cut your biggest costs, like moving to a more affordable apartment, downsizing your car or refinancing a loan to reduce your mortgage or vehicle payment. If possible, you might consider moving back in with your parents.
  • Reach out to your creditors. Lenders are sometimes willing to reduce or defer your payments when a borrower is facing a hardship. If you think you might fall behind on a payment, contact your creditors right away (before you miss a payment), since they typically offer more flexibility while your account is still in good standing. If you've been affected by the ongoing coronavirus pandemic, you might be eligible for special relief.
  • Review your bank and credit card statements. It's easy to forget about expenses when you're stressed, especially those automated charges that only come around quarterly or annually. Reviewing your account statements can help you find recurring charges and cancel them before the next due date, or at least try to prepare for them. It can also help you find unnecessary spending in your budget.
  • Cancel services you don't need right now. Consider going without subscriptions, memberships or costly extracurricular activities. You don't have to give up all your hobbies forever, but choosing a cheaper alternative, or a free alternative, for just a few months can help you balance your budget. You can always sign up again when the dust settles.
  • Reduce or pause your benefit contributions. Review your pay stub to see if you can cut back on voluntary contributions. Eliminating retirement or health care savings contributions slows your progress and isn't a good long-term strategy, but you may need that cash temporarily for food and other necessities, or to rebuild your emergency savings. As soon as your income improves again or you otherwise get on track, start up your contributions again.

As you review each cutback, keep in mind they likely won't last forever, just until your circumstances improve. Instead of thinking of what you'll lose out on, focus on identifying the costs you can immediately eliminate, reduce or put on hold. There will be some short-term pain, but cutting expenses could help you keep a roof over your head and food in the refrigerator.

Increasing Your Cash Flow

If your budget is already tight, you may not be able to gain the extra cash you need from eliminating some expenses. In addition to cutting costs, consider all of your options for bringing in more cash, whether temporarily or permanently. Here are a few places to start:

  • Apply for assistance. If you were laid off, applying for unemployment or other benefits should be at the top of your to-do list. You might now qualify for medical coverage or certain federal or state benefits as well, so be sure to research what's available. Take your time to find out what's out there and spend time on applications—the benefit to your budget will be worth the hard work.
  • Sell or rent items you don't use. Renting out an extra room or selling your second car could bring in a significant amount of money, but you could also come up with cash by getting rid of old jewelry, workout equipment, electronics and appliances, or selling other valuables you don't really use and can replace later.
  • Find an alternative income source. Now might be the time for you or someone in your household to pick up a side hustle, even if it's just temporary. Start by putting together a list of things those in your household can do, such as making and selling knitted goods, driving for a rideshare company or tutoring. If you're really in a pinch, be sure to focus on the opportunity that's most likely to help you earn you the most money, fast. Whatever you choose, make sure you're prepared for any tax liabilities.
  • Use your network. You might be tempted to hide your situation from others, but you'll be losing out on potential job referrals or other word-of-mouth leads and resources. Update your résumé and reach out to old coworkers or consider letting people know about your job search through social media outlets.

Further Help With Debt

In difficult times, it's important to try and stay current on your debt payments. If you miss your payment due date, or pay less than the minimum due, you'll likely face late fees and take a big hit to your credit. But if you can't cover the minimum, or you just need more breathing-room in your budget, you might need to take further measures.

Debt Consolidation

If your credit is in good standing, you might consider debt consolidation. A debt consolidation loan can be used to pay off your existing debt, and as an added benefit it leaves you with just one monthly payment. If you can find a debt consolidation loan with a lower monthly payment than you have on your current debts, or even a loan with a lower interest rate, it could provide the help you need.

Debt Management

Another option is to get on a debt management plan (DMP) created by a nonprofit credit counseling agency. With a DMP, you'll have a single monthly payment that's then distributed to your creditors, which could be easier (and cheaper) to manage than a big pile of bills. A DMP could result in reduced payments and interest rates, or even forgiveness of your late fees. Note that debt management is not the same as hiring a debt settlement agency, which can be costly and cause major damage to your credit.

Recovering From a Financial Challenge

Examining your income and expenses will help you get a realistic idea of how much money you need each month, and whether you'll need assistance, side-jobs or another strategy to make ends meet. You'll also probably need to make cutbacks and sacrifices that can help save you from financial ruin, including bankruptcy.

While you're adjusting to your new budget, remember that the goal isn't just to break even. As challenging as it can be, you always want to try and put a little bit of cash aside for emergencies and other unexpected costs, or to cover you in case it takes longer than expected to become a two-income household again.

Even if it's just a small amount like $20 a week, try regularly setting some money aside. Eventually you want to build up emergency savings with a balance equivalent to three to six months of living expenses. But in the meantime, tracking your credit and saving even just one month's worth of your rent or mortgage payment can help you rebound faster if another financial difficulty comes your way.