Financial Planning for Single-Income Families

Discuss your financial goals

“Teamwork makes the dream work” isn’t just a catchy motivational phrase. It’s at the core of financial planning for couples. Start by having an open, values-driven conversation about your short- and long-term goals early on.

Are you prioritizing saving for a home, building wealth, or creating flexibility for future career changes? Not only does getting specific about your goals help create actionable plans, but it can also help you find an appropriate saving strategy that will bring your dreams to life.

Equally important is aligning your money mindset. Each partner can bring different experiences and attitudes toward saving, spending, and risk. It’s important to take time to understand each other’s perspectives so you can reduce any possible friction or conflict down the road.  

Tips to help make the most of one income

Living on one income doesn’t necessarily mean limiting your financial potential, but it does require a more strategic and intentional outlook. As a starting point, here are a few ideas that can help both you and your partner feel prepared and involved. 

• Check in on your emergency fund: Set aside enough savings to cover at least six to nine months of expenses before you transition to a single income. But during times of economic uncertainty, it can be a good idea to set aside even more. 
• Set up a new budget: Rework your monthly spending and saving plan to reflect the shift to a single paycheck. For example, if one partner stays at home, this could mean saving on things like commuting, childcare, or even going out to eat for lunch. Those dollars could now be reallocated toward something else in your budget. Also, identify other areas where you could reduce costs (think: non-essential expenses like subscriptions or any unused memberships).
• Consider opening a joint checking or savings account: If you don’t already share a joint account, this is something to think about. Both partners will have access to the account, which can make it easier to track expenses, manage your household finances, and work toward your financial goals together.
• Pay down debt: When you’re relying on one income, it’s more important than ever to stay on top of your debt. Monthly credit card bills or loan repayments can bog down your budget, put a strain on financial resources, and be a potential source of conflict. Pay attention to how you use credit and always aim to pay your bills on time each month to avoid late fees and interest charges.
• Review tax withholding: You may want to connect with your financial or tax advisor and see if you may need to adjust your tax withholding once you move to a single income. A tax professional can help ensure you’re withholding the correct amount for taxes.  

Planning for retirement

Even if you’re just kicking off your career, the earlier you start planning for retirement, the more likely you’ll reach your retirement goals. Here are some key things you could do long before you hit retirement age:

• Set your retirement age and lifestyle goals.
• Contribute to a retirement plan consistently. 
• Review and update your plan regularly with your financial advisor.  

When thinking about retirement, it’s helpful to understand the different accounts available and the potential benefits and drawbacks they come with. Here are two common plans to consider:

• 401(k): Employment-based plans that allow the working partner to set aside a portion of their paycheck before taxes and may come with an employer match that could help boost your savings.
• Spousal IRA: A type of individual retirement account that allows the working spouse to contribute on behalf of the non-working spouse. Keep in mind that you have to meet certain conditions in order to open a spousal IRA. If you have questions about your specific situation, talk to your financial advisor or connect with an account provider for rules and details.      

Working toward a strong financial future

Choosing a single-income lifestyle reflects your priorities as a family. By exercising trust, transparency, and open communication, both partners can feel heard while working toward your financial goals. And while getting started might require some honest conversations and big decisions, having a shared understanding can help strengthen your finances and your partnership.

If navigating a single-income household becomes too complex, seeking advice from a financial planner can be a smart idea. Not only will they be able to come up with a tailored plan and personalized strategies, but they can also act as an unbiased mediator, ensuring both voices are heard while keeping the focus on long term financial stability for the whole family.