When it comes to earning, spending and investing money, I am fiercely independent. I don’t want to report to anyone, justify my spending or share too much about my financial life. However, I am also aware that if there are two of you, you are much stronger together than alone. It can be complicated, and probably will be, until you have a strong enough relationship to trust each other, support each other, and consider all your efforts are made for the greater common good.
Living on one income requires a sacrifice on both parts. But if you are able to save 50% (or more, if you live on the smallest income) of your joint income, you can retire as a couple in less than 17 years. That is assuming a 50% savings rate, 5% returns on the market, and a 4% withdrawal rate in retirement. First, you need to make sure you are both on board. You can’t make it work if one of you is dragging their feet. Then, you must define your financial priorities. Where will the savings go? Will you invest the money? Will you pay off your mortgage early? Will you keep six months worth of expenses in case an emergency arises, or just three? How much will each person be entitled to as a no questions asked allowance?
And since you are now living on half what you were before, you will need to cut on some stuff. What do you start with? It can’t be just one person’s hobbies, even if there is usually a spender and a saver in a relationship, you can’t deprive just one party. It has to be a joint effort.
Again, because money is often the cause for tensions and even divorces, communication is key. You have to gently encourage your other half to drop their coffee habit, or their gym membership if they haven’t gone in a year. You can’t point fingers and say they are the cause of your financial ruin. For everything you cut on, try to find a satisfying alternative. Think of it as a financial diet. You must stay off the chocolate, but you can have as many strawberries as you like.
So if you cut on expensive nights out, try to find frugal ideas to keep having fun. A picnic with your friends, a camping trip at a nearby state park instead of a hotel getaway, and so on. The easiest things to cut on will be the ones you share as a couple. Date night at your neighborhood restaurant can easily be substituted by a gourmet diner at home. It might be a little trickier to get your friends and family on board, but from personal experience, I have found out that if you suggest something equally entertaining for half the price, most people will happily come along. Once in a while, they’ll still suggest expensive outings, and that is when, as a couple, you will have to decide whether there is room in your budget for that or not.
There are so many ways to save money if you are a little resourceful, that even if you live on one income, there should still be enough left for the occasional treat. But it has to remain just that, occasional. You can quantify it from the start. For example, you both get $100 a month to do whatever you please with it, and then you get $100 as a couple, to either spend now, or save and grow for a bigger treat. That way, no one feels deprived. And if your $100 are gone by the 10th, that’s it for the month.
But globally, living together should be saving you money compared to single life. You share living expenses, you don’t go out as much as you used to, etc. So if you are aware of that, you might find out that living on one expense isn’t that much of a stretch. And it can definitely help you build a solid financial future.