To ask if you can afford to live on one salary?

[coffeeforone]

I'm currently on mat leave and due to go back full time soon. DH found out last week that his job is at risk of redundancy.

We need to do the sums to work out if we would be able to manage on one salary in the short-medium term and if not, what cutbacks we need to make.
I was chatting to a family member earlier who is very shocked that we do not already know with confidence we can live on one salary and should already have been living within the means of the lowest earner in case of this eventuality.

AIBU to this it is ok to need to spend more than one salary if you both work?

Yes but that doesn’t mean we don’t spend more when we both work

Of course it's fine to spend up to what your whole house income is! Great if you can save but not everyone is blessed with an income/outgoings surplus.

Technically we could cover mortgage and all direct debits on one salary. It would leave maybe 250 pcm for fuel, food, all other incidentals. That's what would push us over the edge as a family of four.

Yes. given I am solely financially responsible for my house and outgoings.

If I was entangled in a property with another earner though I expect we would have borrowed more and so have larger outgoings not sustainable on one salary.

No that is daft, especially if the lowest salary is a part time one which if you have a normal job paying between £20-30k pro rata would probably only be a take home of about £1500 per month. With average rents about £800 per month, who could afford to live on that?

I think that's very unrealistic for most people.

We could live on my income (I'm the higher earner) but not on DH's alone.

I get that it's good to have a responsible attitude towards finance but I think your family member is being unrealistic.

No, I actually don't think we could. Which is sort of worrying, really...

We could live on DHs but not mine alone. Luckily tho he's incredibly skilled and not everyone can do what he does.

We could live on one salary but we would have to cut back on every non-essential.

Whether it's "ok" to spend more is down to your attitude to risk. Personally I am often shocked by how small a safety net people leave themselves. (I don't mean people who are on the breadline and barely surviving, who obviously don't have the choice to cut back much - but plenty of people I know on good salaries who seem to maximise their outgoings as much as they can, and then have no safety net when anything happens that might threaten it

Of course it's doable. DH earns about £30,000 a year (self employed) we are a family of 5, I am a SAHM. It's more than doable if you are willing to cut back etc.

We couldn’t. Or at least, we could but it would require a massive lifestyle change. I’m the higher earner, and our mortgage would be just under half my salary if I paid it alone. Add in utilities, phones, insurance, petrol, food and fun and we would be well over my salary.

That said, we could eat and pay the bills if we cut our all the fun and made some other sacrifices.

I don’t think you have to live within the means of the lower earner - but it’s sensible to have as much of a savings cushion as possible in case of redundancy. I also highly recommend critical illness cover.

We are just thinking this as I have an option to take voluntary redundancy.
While I'm confident I will find new work, if it came to it we would have to
Increase DW hours
Kids out of nursery
Car changed to cheaper
Eat lentils for dinner.

This is mainly because we've just taken a big mortgage on to help a family member.

So no, our normal living was using almost all our joint income. Living to 1 the whole time would be good for savings but a meagre life for most people I expect

We could just about pay the bills on my partner's salary and if we cancelled pet insurance, Netflix and sky we could maybe afford to eat. We've only had one income for 6 months in the time we've been together and we coped with some help from the credit cards as our outgoing were much lower.

Your family member clearly lives in 1950. Ignore them and get your calculator out. What everyone else does isn’t relevant to you.

There are good boards here on living frugally and check out money saving expert website.

Thanks! I think it's unrealistic too.

Said family member was also shocked when I said the first thing to be cut would need to be 2 year old DS's nursery, to the minimum sessions required whilst DH was out of work, or cancelled completely if it came to it. Apparently DS would be losing out because of our lack of 'financial planning'.

We manage. And I mean manage. Things are tight. Spending other than bills and essentials is absolutely minimal. DH is self employed which adds a whole extra level of fun to it, not knowing if we are actually going to have any decent money coming in each month.

yes, we do. and have done for last 5 years. We had high wages when working in London, but decided the stress was not worth it. We have a very small mortgage and at with all outgoings, have 700 pounds to spend on food, petrol, clothes etc. We still manage to put money away each month. It's all about making decisions and being wise with your outgoings.

Being a single mum, yes, before maternity leave, during and after.
I’m not a high earner but I manage because my mortgage is small.
I don’t waste money on gym, pay tv, new cars etc but we’re doing fine.

DS would be losing out because of our lack of 'financial planning'
you being responsible for not getting into debt IS financial planning

What a strange thing to think! We certainly couldn’t live off my wage, it isn’t even as high as the mortgage (fulltime professional role). DH, earns 3 times more than me (full time professional with sought after skills), can live off that alone, no problem

We effectively live on one salary as DH and I are both part time.
We're very lucky to have low housing costs, which helps a lot.
At the moment, it wouldn't be worth either of us going full time as the gains would be quickly swallowed up by rising childcare costs and falling tax credits (I did the sums). I'm hoping to up my hours once the youngest is in primary.
So yes, in our case, its possible.
This however:
"very shocked that we do not already know with confidence we can live on one salary and should already have been living within the means of the lowest earner in case of this eventuality." is ridiculous advice.

I agree that everyone should have either a safety net or a plan for what they’d do in the event of job loss; but not that people should live off 1 salary all the time even when they have 2 coming in!

I’m the ‘lower’ earner out of DP and I, on £30K, and I know we could just about squeeze by with mortgage and bills, but would have to get creative with the food shop because there really wouldn’t be much left over.

However, because i’m aware of this, I have some money saved up, plus my plan would be to get an evening shelf stacking job or similar to keep the money rolling in. I never understand people that are happy to be unemployed for months waiting to apply for the ‘perfect’ job; meanwhile spiralling into debt! (obviously this only applies to those who have these sorts of jobs available in their area, I’m lucky enough to currently live near a fairly large city with lots of shops, pubs etc). Working evenings would keep the days free for job interviews etc).

I do.
I’m not sure that you should be living within the means of the lowest earner though. That seems unnecessarily frugal to me. Probably best to build up some saving while there are two earners to cushion for this but that’s all, and that’s only feasible if you’re earning enough to do that. Some dual income families probably have less to play with than me so....

More than half of my salary goes on childcare; if I didn't work I wouldn't use childcare. Things would be tight but we could manage.

Yes, we do, .DP is a SAHD. But obviously it depends.on what the salary is! We save about £800 per month on childcare.