Single-paycheck families plan ahead


One can be the loneliest number -- especially if it signifies one paycheck for a family accustomed to two paychecks.

The growth in families with two incomes has fallen off a bit in the 1990s, as more couples downsize to just one salary. Mothers opting to stay home with children and job cuts at U. S. corporations are among the reasons.

This transition, whether voluntary or forced, requires belt-tightening and planning.

"We'd probably save more if we had two incomes, though we try to put as much aside for things such as retirement as we can," said Charles Bachi, a systems consultant in Scotch Plains, N.J., and sole wage earner for a family that includes his wife, Donna, and two young sons.

Vacations and eating out are two areas the family cut back on after Donna left her management-track job at an insurance company in 1987.

"I went back to work after my first son, Charlie, was born, but he became ill too often in day care and our doctor told us he was simply too susceptible to germs," she explained. "Toughest part of having one income is that no matter how much you make, it's never enough."

Most often, the woman is still the one to give up a job to stay at home and the man becomes the single-income earner, said John Helmuth, associate professor at Rochester Institute of Technology. But it's expected that many of these women, especially those in higher-level jobs, will return to the work force. The percentage of husbands who don't work has increased from 3 percent in 1968 to more than 8 percent, pointed out Sheldon Danziger, professor of social work at the University of Michigan. It's not possible to distinguish in the data between husbands laid off and those consciously switching family roles.

"The determining factor in leaving a job is often the cost of required child care, which can cut deeply into a paycheck," said Lee Price, chief economist for the Joint Economic Committee of Congress. "The other consideration is usually whether the other salary in the family already provides sufficient income."

Many families giving up a paycheck don't adjust budgets the way they should. "Going from a two- to a one-income family requires discipline in dealing with a smaller cash flow, so extraneous debt such as credit cards must be eliminated," counseled Nancy Morrow, certified financial planner with IDS Financial Services in Denver.

With a single income, it's even more important to start setting aside some discretionary income on a monthly basis for children's educations, even if you start with just $50.

"The single-income family must take retirement planning seriously, putting in the maximum amounts allowed because prospects for forced early retirement are greater these days," warned Alexandra Armstrong, chairman of the Armstrong, Welch & MacIntyre Inc. financial planning firm in Washington.

She suggests the diversification of mutual funds, favoring Vanguard Group and American Funds, as well as Templeton Funds in international investing.

Living off one paycheck has been done for a great many generations, so it's not impossible.

"It's not as difficult as you think, since the second wage earner's income is often eaten up in transportation, wardrobe and lunch expenses," noted Amy Dacyczyn, publisher of the Tightwad Gazette newsletter, published in Leeds, Maine.

Suggestions from Dacyczyn for families about to switch from two paychecks to one:

* Study family pay stubs and tax information to determine what net income would be. Compute tax consequences, which may put the family in a lower bracket. Subtract expenses related to the second income, such as transportation. Once you've figured the gap between one and two incomes, look for ways to modify spending.

* Eliminate many optional expenses, such as eating out often or buying expensive items. Look to cost-cutting measures such as buying food in bulk, doing more comparison shopping, using coupons or eliminating convenience foods. For some purchases, consider thrift or consignment shops, auctions or items in classified advertisements.

* Trim energy bills through conservation and buy only energy-efficient appliances. Make sure your insurance coverage fits your family needs. Decide whether you can afford the size home that you own, or whether you'd do better financially with a smaller one.

Finally, don't try to keep up with the Joneses. It costs too much.

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