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Two incomes aren’t always the obvious choice. Most households today consist of two incomes. Stay at home parents are less and less common. Part of this is due to the increase in housing costs in many areas. Houses are larger, fancier and more expensive than ever.

But have you thought of the costs associated with two incomes? When both parents work, there are more auto costs — double the auto insurance, gas and maintenance. There is also day care, an increased level of taxes, more for clothing and even lunch.

You have to spend money to make money, after all.

Two income homes are often more risky than one income homes. When there are two incomes, a level of spending is reached that is comparable with the two incomes. If one wage earner is laid off or can no longer work, the family may find it is in financial trouble.

In a one-income family, if the wage earner is no longer working, the partner can go to work and provide approximately the same level of living for the family. Yes, there may be a gap in the incomes, but it usually isn’t as severe as when a two-income family loses one income.

It’s not that two income families aren’t great. They are just as wonderful as one-income families. But you should consider all of the costs when looking at the extra income. It is often more sensible and increasingly frugal to consider becoming a one income family.

Even if you are a two-income family, you can reduce your risk by simply working your budget so that you are living off of only one income, not both. That way, you are able to cushion yourself against any unforeseen occurences. The income from the second income should go directly into savings each month. You will be amazed how quickly your savings will grow by doing this.

It can be difficult to go from two to one, but if you adjust yourself gradually, you should really notice the difference. The changes can start as simply as no longer eating out for lunch. For two people, that can save around $100 a week. That’s $400 a month!

Then, consider carpooling. Lots of families arrange it so that one person goes on and off work fifteen minutes before and after the other person. That way, they can ride together. This can save a lot given today’s rising gas expenses.

Find ways to cut your monthly expenses. Start paying off all of your credit card debt. If you have no credit card debt, start paying off your other debts. You should make sure that you have emergency savings that will cover up to three months of expenses. This will cushion your budget from unexpected emergencies.

Look to ways to cut your utilities, grocery spending and entertainment costs. You will be surprised what you will cut and never really miss.

One or two incomes, it is up to you. But make sure you base the decision partly on the math involved, not just what others are doing.

Martin Lukac (http://www.MartinLukac.com), represents http://www.RateEmpire.com and http://www.1AmericanFinancial.com, a finance web-company specializing in real estate/mortgage market. We specialize in daily updates, rate predictions, mortgage rates and more. Find low home loan mortgage interest rates from hundreds of mortgage companies!

Tags:insurance,car insurance.life insurance personal finance, household income, second income, budgeting, finance

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It isn’t always possible to find the right budget for your finances on your first try. People think of finances as being a solid, written-in-stone thing. They look at budgets as being unmoving.

They couldn’t be more wrong.

Your finances change constantly. Your shopping each month isn’t even the same. A budget must be flexible in order to survive. At first, you must be willing to let things change and adapt. Over time, your budget will really become your own and it won’t change as much. You will.

You can’t simply take a cookie-cutter budget and make it fit your spending habits. It simply won’t work. If you’ve always spent $200 a month on groceries, chances are that you won’t be able to cut it to $100 overnight. You have to consider that the cost of living is very different in different areas of the country. You have to consider that no one shops like you do. No one knows your finances like you do.

You have to be accurate when predicting your income and expenses. Income is often easy to predict for those that have a fixed salary. Those who do not should go with the lowest projection.

When it comes to your expenses, you have to be honest. If there ever was a time for the truth, it is now. Don’t forget to include expenses that don’t occur monthly, such as your auto insurance, homeowners insurance, property taxes and other expenses. By setting something aside for these items, you won’t be hit hard when the roll around. Your budget will survive them.

You can’t just sit and create a budget then tuck it in your desk. You have to review it just as you do your checking account. Consider it as a manager for everything. It can serve as a checklist for paying your bills. It can serve as a way to see how much you save. It can help you manage your finances in numerous ways.

You also have to have a goal or multiple goals. You have to have a reason to be budgeting. Keeping your eye on the goal isn’t always easy. But you have to keep reminding yourself what is so very important about saving and paying off your debt. Look at what you get in return, not at what you are giving it.

Then give it all you have.

Martin Lukac represents http://www.RateEmpire.com, an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com provides mortgage guides and financial rates and information. RateEmpire.com also operates a financial portal #1 American Financial, found at http://www.1AmericanFinancial.com and San Diego loan portal http://www.LendingSanDiego.com

Tags:insurance,car insurance.life insurance budgeting

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Do you run out of money before you run out of month? Do you wonder where your money goes each month? Do you struggle to find money to invest for retirement, emergencies and other financial goals? Here are 10 tips to cut your spending and stretch your dollar to the max:

1. Consider dropping your home telephone line. Your cell phone is probably all you really need, and most likely it has free long distance. You could save $30 or more per month by dropping your “land line”.

2. Cut back on trips to Starbucks or other premium coffee shops. Often called the “latte factor”, spending several dollars per day on luxuries like premium coffee can really add up. For example, if you spend $4 for a cappuccino five times a week for 50 weeks out of the year (you’re on vacation the other two weeks), you would spend $1,000 in a year. Try treating your trip to Starbucks as a treat instead of a habit. You’ll save money and probably lose weight too!

3. Pay your mortgage payment bi-weekly instead of monthly. You’ll pay less interest and pay off your mortgage faster.

4. Carry cash instead of credit cards. Psychologically it’s harder to spend cash than it is to use the credit card. You’ll spend less and save on interest charges.

5. Use the “envelope system” for groceries, dining out, entertainment, and other discretionary spending categories. This will help you track how much you spend in these categories as well as prioritizing your spending.

6. Raise the deductible on your homeowners and auto insurance policies. It’s not wise to file claims for small losses anyway (insurance companies love to raise rates after you file a claim), so a higher deductible will save you money now and in the future.

7. Buy regular gas instead of premium. Most cars don’t need premium gasoline. Also, take public transportation if it’s available in your area. Take advantage of “park and ride” and carpooling options.

8. Plan your purchases to avoid impulse buying. Take a list with you to the grocery store and stick with it. Studies show that impulse buying can add $10-50 to your grocery bill - ouch!

9. Go to the library instead of the bookstore. If you’re an avid reader, give yourself a book budget for books that you will want to keep, and go to the library for everything else.

10. Take a vacation at home. Check out all the local sites and happenings. You’ll rediscover your hometown and save on travel and hotel costs.

These are just a handful of ways you can cut spending and stretch your dollars, but if you follow these tips you’ll discover you have more money at the end of each month to apply to other financial goals, such as saving for college, retirement or just for a rainy day.

About the Author

Kristine A. McKinley, CFP, CPA, and founder of Beacon Financial Advisors, teaches individuals and families how to invest and plan for retirement, college, and other financial goals. Kristine offers financial and tax planning on an hourly, fee-only basis.

To sign up for free financial planning tips, worksheets, checklists and more, visit http://www.beacon-advisor.com

Tags:insurance,car insurance.life insurance budgeting, taxes, retirement planning, Cash flow planning, financial planning

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