I often hear people talking about living on one income, or needing two incomes, or some variation of this topic. Today, I read Start Living on One Income! at Debt Free Adventure. While I don’t agree with every word, I definitely agree with the general principle, and I think it is even more important for military families than for the rest of the world.
The main idea of the article is that your family should finance its month-to-month needs by using only one paycheck. If the other spouse does work, or you have a second job, that money should be spent on things outside of daily living expenses: paying down debt more quickly, building an emergency fund faster, additional saving for retirement, etc.
I’m sure someone out there is saying, “Do you know what young military folks make? They need to have more than one income.” Yes, I do know what young military folks make and I agree that it isn’t much, or nearly enough. I also know that using that second income to finance fixed expenses (rent, car payments, etc.) is a recipe for disaster. If you are relying on that second income to meet your monthly expenses, what happens if that second income is lost?
The military lifestyle adds lots of extra reasons why that second income might go away, including regular moves, deployments that make it hard to keep up with a family and a job, and the crazy working hours of the active duty spouse. If a military member can find a second job that works for him or her, it is usually a short-term situation as working schedules and deployments interfere. Statistics show that military spouses have higher rates of unemployment and underemployment than their civilian counterparts.
So, what’s a military family to do? Just as suggested in the article, military families would be smart to keep their necessary expenses down to the amount that can be paid by just the active duty income. Rent, loan payments, food, gas, and utilities should not exceed the active duty pay and allowance. A second job, or a spouse’s job, can pay for non-essentials: paying off debt faster, building up your retirement, vacations, big purchases, and fun stuff.
I don’t want you to think that people who are living on only one income should neglect their savings or debt repayment. Those things are important no matter how much income you have. However, the second income allows you to do those important things even faster, and have fun at the same time.
This is sounding like a gloom-and-doom post, but it is meant to be encouraging. Once you do the hard part of paring your essential expenses, the rest is a bonus and will make life that much easier for you.