Do you NEED 2 incomes?

[MonkeyMama]

How many 2-income couples do you think have enough money saved up for your scenario?

Agreed.

Honestly, we would be more prepared than most 2-income people we know.

Of course, most 2-income people we know gross more but take home about the same anyway. A large reason why my spouse has not worked in 6 years is because taxes and daycare would have eaten so much of his income. (Most, if not all). On the flip side we are able to save a fair amount of money with a spouse who stays home. To believe 2 incomes = twice the income (a common belief) is actually pretty misguided. A second working spouse has a fair amount of expenses - auto/transportation, work, and childcare expenses, just to name a few. We are able to save a fair amount on food with time to grocery shop and plan meals, etc. Plus we are in a very low tax bracket and have no needed daycare expenses.

[LivingAlmostLarge]

I think that with the second income at least you don't have to look for a job in case of accident or disability.

[zakity]

Well, we would be fine for a few months. We have an EF that should last 3 months. By then, we could refinance the house into a lower loan and I could get a job.

And, if he dies, I am rolling in it. Between the social security check that I would get monthly because of the boys and my being the surviving spouse and his life insurance money. The boys and I would be sitting pretty.

He is very nice to me. **teehee**


Actually, he would be do ok if something happened to me. The boys are old enough to stay home alone now. He would get some money for being the surviving spouse and the boys and my life insurance would pay off the house with a little left over.

[MonkeyMama]

I think that with the second income at least you don't have to look for a job in case of accident or disability.

That's what disability insurance (& savings) is for.

I took quite a few months off work with the birth of both my children, when my spouse did not work. Some was paid by disability. A lot more was financed by savings.

[MonkeyMama]

Even if I was pulling in $150,000/year. . .I would need my wife at her job for the health insurance. If I go out and purchase my own policy for the family, it is 2-5X more expensive than if you buy an individual plan.

Always remember, the self-employed view the world much differently than you gainfully employed folks.

Oh boy, not to pick on you but this gets really old.

Employees are not guaranteed health benefits in this day and age (certainly not good/affordable benefits).

By the same token, just because it is more expensive doesn't make it completely unaffordable. I could afford our private health insurance quite easily on $150k. We do afford it on MUCH less actually. For really good insurance. (I've actually always preferred private insurance over the crap I have been offered through my jobs, but my current boss does not cover my family so little choice anyway).

But yeah, just had to say, always lived on one income (fair enough we both worked in the past and will probably both work again, because we both like to work. But doesn't mean we live off the second income or NEED it).

Anyway, I think 99% of people believe they can't give up that second job because of benefits.

We gave it up and we survived. It's not easy. It is more expensive. But it is doable.

[MonkeyMama]

To the original question.

Where we are originally from (most expensive rents/housing in US) I would say we would be hard pressed to live on one-income. Even a very high income. Doable, but not a great life.

We moved somewhere cheaper (because we were uncomfortable with the financial risk of relying on two incomes to pay the bills) so I know our view is very skewed.

I can't help but think we have it easier though. Our grandparents grew up during the depression. Our parents worked much harder/longer to get where we are at a much younger age.

Our whole lower-cost-of-living move may has certainly skewed our view a bit. But the difference for us is really primarily perspective. We are more apt to realize that we can afford our own health insurance or that we don't need 2 luxury cars. I know people who make 1/3 what I do and don't realize some of this stuff. They buy into it all and will clearly never get ahead. (you know, the NEED the $5k vacation every year, the NEED the 2 luxury cars, and they can't figure out how we get by on one income. Conveniently ignoring that we don't have all that crap).

[cptacek]

Right now, in order to reach our short term and long term goals, we need two incomes. We could actually use three

[GoodBuyGirl]

As long as you have something to fall back on I think it can be done.

You have to be more prepared for all the What if's. Things like car crashes and cancer don't care if you are a one income family and can't afford them.

[maat55]

I tend to you agree. However, that beliefs often is not the reality of today. If you take into account the high food and enery costs, skyrocketting health insurance, wages unable to keep up with Inflation, yearly increases cost of college education, and the dollar losing its value puts any sole breadwinners of any family behind 8 ball to start with.

How about if you have 2 or more kids to support? Perhaps, supporting your parents in some financially, like my wife do with her parents? Any type emergency alone would eat your savings up especially big item ticket like a mechanical breakdown, new roof, new washer or dryer. Those are impossible expenses to overcome by a single earner alone, and not use some sort of credits for warranted family emergency is very difficult. How about paying taxes and the state you live in, let alone trying to fully fund your retirement account. And we wonder, why we Americans in so much debt.

We don't know anyone personally married couples either our friends, distant family, acquintances or coworkers whom chose to live in one income. Ok maybe we know few some personally but their not married with kids to support It's also a trying time in our economy outlook with job uncertainty. Don't get me wrong, I like the idea of one sole breadwinner. But in todays reality, its very difficult to hang on that beliefs. But hey, more power to you.

I'm not a high wage earner, and I have never known a time that I could not have supported my family alone. When we started taking on debt many years ago, it was because we chose too much lifestyle.

But my circumstances may be very different than most due to that, I am self-employed and living in a lower cost region.

I'm not going to argue that no one should live off two incomes. Some will live off two because they have too and some will because they choose too much lifestyle.

[disneysteve]

I'm not going to argue that no one should live off two incomes. Some will live off two because they have too and some will because they choose too much lifestyle.

I'm also not trying to say that nobody should live on two incomes, or that nobody needs to. My point was just that I think a lot of people who feel they NEED two incomes probably don't. What has made both incomes a "necessity" is the lifestyle they've chosen to live.

If both spouses want to work and enjoy working, that's great. I know quite a few couples, though, who really wish mom could stay home with the kids but don't feel it is possible. When I speak to them and look around their house and see how they live, I understand why they feel that 2nd income is needed, but it really isn't. If having a stay-at-home parent was really a priority for them, they could easily adjust their lifestyles to make it just fine on one income. As we often say here, it all comes down to priorities and balance.

[MonkeyMama]

I had to add something else after sleeping on this.

I don't think 1 or 2 incomes really matters as far as financial security. How well you manage your money is what matters. You can manage quite well on one income and do terrible on two incomes.

I have to come back to the sick/accident example and go back to my maternity leaves as an example. When I was pregnant I was hanging around on a message board with people across the country/varying backgrounds. MOST if not ALL said they could not take any time off work because they had no maternity benefits. (The ones who took off had benefits).

As I said, my spouse did not work and I took many months off. Yes, I had some disability benefits, but I took off longer than my benefits (which were piddly anyway). People in my city ALWAYS assumed I had maternity benefits through my job. (No way, I don't even have health insurance - small employer). You don't know how many idiots told me they couldn't afford to take a day off of work because they had no benefits. (Telling me this at a time I had no benefits and a NOT WORKING spouse. In a tone they were jealous of my $0 income situation. I knew their spouses made good money).

I have a friend who had a baby very young and her husband and her don't have degrees. They have always been very resourceful - I doubt they made $30k between the two. I almost fell over one day when we were discussing my impending maternity leave and she told me she had lived in Texas with her last child and there was no mandatory disability insurance there (like in Cali) and how her child was completely unplanned. So she saved up the money for her leave. Totally *her*, but I almost fell over because I had never met ANYONE who hadn't said "I was entitled to benefits and if I didn't get them I couldn't afford to lose one day off work." She could have easily written off that they just didn't have the means for her to take time off. (I've got some other stories but then I would write a novel).

Since I am young this is the pretty common scenario I have seen with people struggling to afford some time off work. Trying to figure out how to live a few weeks on a reduced second income or how to take any time off with no income. It scares the hell out of me that so few people do seem to be prepared for any hardship.

Anyway, in theory, yes, 2 incomes would be better in case of hardship and in case one spouse could not work. In reality, I know few prepared for that scenario on one or two incomes.

[Joan.of.the.Arch]

pardon me while I momentarily pursue a tangent MonkeyMama brings up.

MonkeyMama, what's this about disability benefits? In California pregnancy can be considered a disability and you can get payments for it? Is it state aid? Payable by employer? Is one eligible for it even if not employed? May I ask how much payments are, or what the payments are based on if it is variable? When do payments start and end?

[MonkeyMama]

pardon me while I momentarily pursue a tangent MonkeyMama brings up.

MonkeyMama, what's this about disability benefits? In California pregnancy can be considered a disability and you can get payments for it? Is it state aid? Payable by employer? Is one eligible for it even if not employed? May I ask how much payments are, or what the payments are based on if it is variable? When do payments start and end?

Sorry about the tangent everyone.

For most (many) disability policies, pregnancy is considered (talking short-term disability). If you buy the policy after pregnant though, the pregnancy won't be covered... (That whole pre-existing thing). So you do not have to be in California to be covered for pregnancy by ST disability -just a general FYI. Any women of child bearing age should probably have ST disability with maternity benefits. (I believe most don't). Particularly if they are single!!!!! Pregnancy can destroy you financially and short-term disability is a cheap way to avert disaster. Birth control is not 100%. This is my PSA.

In California, all employees are mandated to buy in to the (short-term) state disability insurance system. It is administered by the state but I don't think it is that different than any short-term disability insurance except it may be cheaper (financed a little by the state?). So yes, you have to be employed to both pay into the system and to get benefits from the system.

For this year 0.8% of your pay is withheld from every paycheck and paid into the system. In years past it was 0.6%, but they have added "paid family leave" to the program in recent years, so it has gotten more expensive.

If you are a government employee you can opt out (I think government workers are offered *better* plans instead).

They replace 55% (corrected) of your income during disability. But you know, it's a weird formula. I actually got more because they consider your highest paid quarter during the prior year, or something like that.

Maternity benefits - standard 4 weeks before due date & 6 weeks after delivery. Your job is required to be held for you. But if covers bed rest earlier on, and extra recovery time if need be. C-section is 8 weeks recovery, standard.

[MonkeyMama]

P.S. I understand the ignorance out there. My spouse was not working when we planned our first child and we just hoped we had enough savings to cover if I ended up on bed rest or something. So I didn't have a clue about any of this stuff, until well into my first pregnancy. That I had maternity coverage was actually a nice surprise, to me. But I don't think most women in most states are so lucky. (They usually find out about the insurance after it is too late to get coverage).

[tripods68]

Correction MonkeyMama - SDI covers 55% of full year salary for government employees.