How do you prepare for life as a one-income family?

For her first seven years as a parent in the mid-90s, Amundsen stayed home to raise two young children while her husband became the sole breadwinner. Nearly 30 years later, he still uses his knowledge when talking to his clients. Planning ahead is at the top of his list.

Try a single income stress test

Start with a trial and manage your home for three to six months on one salary, he said. That test will build confidence and help you understand your needs and wants while deciding what you might need to change about your lifestyle, he added.

Transitioning to a single-income household requires some adjustment and cost cutting, says Tina Tehranchian, senior wealth advisor at CI Assante Wealth Management Ltd. That means adjusting your budget for dining, entertainment, registration, travel, home maintenance, and car upgrades. “The goal is not to eliminate these costs, but to ensure that they fit comfortably within the new reality,” Tehranchian said. “For now, just save the second salary and see if they can handle it and can survive on just one salary,” he said. “This provides a real stress test for the family.”

Balance savings with long-term goals

Some expenses will also go to the stay-at-home parent, such as travel expenses, expenses for professional cabins, parking, and childcare costs. Some households may no longer need two cars, saving on insurance, gas, and car maintenance.

You’ll know the one-income home test is successful if you still have room to save, Amundsen said. “Do you still have enough money to fund your emergency fund for all the unexpected?

With the cost of living rising, saving for all those goals has proven difficult for many Canadian families with two sources of income, let alone one. Amundsen said this is where advance planning is important in prioritizing those savings.

Often, Amundsen’s clients ask him if they can reduce their pension or retirement income as they reorganize their priorities. It’s not a simple yes or no question, he said, it’s about knowing the consequences and being prepared to trade off. They need to consider the long-term effects of losing benefits, pension accruals, and future earning potential when you are out of work. A stay-at-home parent may also need to work for a few years after returning to work to make up for lost retirement savings.

Prepare for financial and emotional changes

It’s also important to know how safe a breadwinner’s job is from layoffs and the risk of sudden disability and health concerns, Tehranchian said. More importantly, note how you feel about the test and if you think you can realistically do this for a few years.

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There’s a big emotional component to being a stay-at-home parent, especially when so much is changing around you, from your lifestyle to work and relationships, experts say.

“The spouse leaving their job or career: How will they feel this year, next year, and in the years to come?” said Ryan Gubic, certified financial planner and founder of MRG Wealth Management. He said it is important to discuss how spending decisions will be made between spouses, whether the stay-at-home parent will still have the money to decide for themselves to enjoy life, and how household burdens will be divided.

For couples, it’s important to be proactive rather than reactive, he said. “Rather than waiting until a problem arises … if they can talk about it before it happens, it gives them both an opportunity to understand.”

However, re-entering the workforce can be difficult for many stay-at-home parents as they lose positions or fall behind in needed skills. Amundsen remembered that he had to start over when he re-entered. “I started back at a low-paying job and started from scratch,” he recalled. “I worked hard and went back to university while still working full-time.” Still, Amundsen said he wouldn’t trade the years he spent raising his children for anything.

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