Q: I am the proud mother of two young children - ages 5 and 4 months. After having our first child, I went back to work, however, my husband and I agreed that it would be best for me to stay home now that we have two little ones. Since we were married, 8 years ago, we have always had two incomes, and I am concerned that we won't be able to afford living on one income. Can you offer some suggestions on how to survive this big change, while also trying to plan for the future?

A: Before baby makes one – paycheck, that is – you may want to try the new budget out on paper.  Gather three months worth of bank statements and bills to determine how much you need to live on each month.  If your husband’s paycheck won’t cover these bills, you may want to look into a part-time job or a telecommute position to make up the difference (and then some – remember you can’t always predict when the dryer will break, your daughter will need new sneakers or the gas prices rise again).

If you’re sure that, with a bit of cutting back, you think the salary cut may be manageable, give it a trial run.  “To get used to living on one income, go back to a cash basis,” says Galia Gichon, a personal finance expert and founder of DowntoEarthFinance.com. “There is no better way to control your spending and budgeting.  Just by living on cash for a month or so, you are forced to live on your income, spend more consciously, and not start off with a nasty credit card habit.”  You can also bank your paycheck while living on your husband’s, giving you a nest egg to pay down debt or start an emergency fund.

Many families try living on dad’s income during the pregnancy, which allows some eight months of trial – and saving mom’s check.  But that doesn’t mean a shift to one income is impossible, if you learn to rein in the spending. During the trial run, examine your monthly purchases to see where cuts can be made.  For example, consider “downsizing” to basic cable, cutting out film club memberships and using the public library for books and videos.

Smart Money Moves To Make Before Leaving Your Job

• Pay off debt, starting with the highest interest credit cards.  If necessary, get a lower interest debt consolidation loan or a second mortgage (the interest will be tax deductible!) to lower your monthly payments while paying off these bills more quickly.
• Ask about your employer’s leave policy.  Some employers allow leaves of absence for various reasons.   Perhaps you can take six months or more off to try out the new household cash flow, while still having the safety net of a job to return to if you find you need to.
• Decide what is essential – and stop paying for non-essentials.  Yes, this might even mean shopping the sales or consignment shops, clipping and using coupons or halting impulse buying.  Put your savings in your emergency fund account, and try to build that account as much as possible.
• Discuss your “What-if” plan.  “The couple needs to discuss what they’ll do financially in case something unexpected happens to one of them,” says Gichon.  “Having the conversation – no matter how difficult – will lessen the stress.”  Also, if you haven’t already, shop around for a good life insurance policy.  It may be unpleasant, but it’s necessary, and it will bring peace of mind.

Look for little ways to save money, and then put the savings into your emergency fund.  In their book, Comeback Moms: How to Leave Work, Raise Children and Restart Your Career Even if You Haven’t Had a Job in Years, authors Monica Samuels and J.C. Conklin suggest looking for hidden savings in these places:

• Home and cell phone plans. You may be able to live without the landline, or find a plan that offers more for less.
• Magazines or newspaper subscriptions.  Most content appears on the Internet.
• Prepackaged food.  When you’re at home, you’ll have time to make more meals from scratch – at a considerable savings.
• Heating and cooling.  Start turning your thermostat down a degree or two in the winter and up one in the summer to see a difference in this bill.  Remember to turn down the heat and pile on the blankets at bedtime.

If, after a thorough examination and making all cuts possible, you’re still not sure about living on one paycheck, you may want to look into making it a “paycheck and a half.”  Explore ways to add to the bottom line.  You may be able to do consulting work in your own field or find a variation on your old job (for example, teachers can look into tutoring after school).  Consider working part time when your husband is home with the kids, or investigate telecommuting positions.  If you have the room, look into becoming a caregiver to help out other working moms.

And remember, you are not alone.  According to statistics from the US Department of Labor, more than 10 million children live in households where mom is at home (and almost 200,000 children have stay-at-home dads). With an eye on the budget and a mindset of padding your savings at any turn, you may be able to join their ranks – successfully.

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