Are Two Household Incomes Really Better Than One?

Not too long after our first child was born, the Honeybee left her position as a paralegal for a bankruptcy attorney to become a stay-at-home mom. It was a decision that we had both happily agreed to before we were even married. That course of action effectively turned us into a single income family, and it’s a decision I’ve never regretted for one moment.

Yes, if the Honeybee had remained working, I figure we probably could have netted an extra quarter-million dollars in household income over the past 14 years. That’s not too shabby, considering it would have been treated as spare change. Then again, sometimes you just can’t put a price on things — and the intangible benefits of a stay-at-home parent is certainly one of them. At least it is to me.

There is no doubt that fiscally disciplined two-income households can provide monetary benefits that a single-income household can’t. The trouble is, more often than not, two-income households become ensnared in the infamous two-income trap. That is, most couples tend to put themselves at risk by spending to their household income level, rather than taking advantage of that second paycheck by using it to boost their retirement nest egg contributions, emergency savings accounts, and kids’ college funds.

Needless to say, a two-income family that ends up depending on every penny of household income to cover the monthly bills ends up being just as vulnerable to financial problems in the event of a job loss as a single-income family. Then again, maybe even more so, considering a two-income household is arguably twice as susceptible to a job loss.

There are advantages and disadvantages to both one- and two-income households. Just remember that a household with two incomes doesn’t necessarily guarantee a brighter financial future than one with a single paycheck. That’s because, ultimately, it’s not about how much you bring home, it’s about how much you spend — and save.

Photo Credit: Images_of_Money

26 comments to Are Two Household Incomes Really Better Than One?

  • Annemarie

    Stepping out of the workforce can make it harder to get back in once the kids are grown, though. I’m running into that now: my husband stayed home with our daughter and I worked, then I left the workforce to care for my parents. (He has a blue-collar trade and had no trouble finding a job, luckily.)

    I’ve found miscellaneous part-time jobs through networking and so am luckier than most. And I definitely don’t regret the years with my parents. But it’s hard, and our own retirement is looming.

    • Len Penzo

      Yes, reintegration into the workforce after a long time away from it is a BIG drawback for those parents who decide to stay at home, Annemarie. That’s why those who intend to go back to work will need to focus on keeping their skills sharp, maintaining old connections, and/or starting an at-home business. As you point out, some jobs are probably a lot easier to return to than others.

  • We did it on a single income and it wasn’t easy, especially when we were just starting out. We live in an expensive area and we had to compete with dual income couples for housing, schools and other resources.

    It seems to have been the right decision for us. Now that the kids are adults and the house is paid down, the pressure is off. We don’t have to look back and wonder if we did the right thing for the kids. And, the pressure to provide caused me to step up in my career.

    • Len Penzo

      It was a lot of pressure on us too, Bret. Same issues, including competition for housing, and the struggle to make ends meet for a few years because we had really stretched ourselves early on. So we didn’t do much in the way of entertainment those first few years. In the end, however, it’s all been worth it!

  • pen

    My friends and I are all getting married right about now, and the group converstations on the subject of having a stay at home parent are interesting. for our group,it largley comes down to whether one partner can provide a stable income to support a family. If both partners are in a risky or low paying job, both keep working. If one partner has the ability to provide a good stable salary, one adult stays home.

    • Len Penzo

      Yeah, I think that’s a good way to look at it. Still, regardless of whether you choose one paycheck or two, it all boils down to how much you spend vs. how much you keep!

  • We are a dual income family, however my wife worked part time when our children were small. My wife and I work enjoy our work and most of the money goes into retirement savings.

    • Len Penzo

      … and you probably have a very healthy nest egg by now KC! The irony there, of course, is that you could probably retire very comfortably — but you probably don’t want to. Life is funny that way!

  • tracee

    we were dual income and then the layoffs hit and the boyfriend was laid off, so we switched to a one income family with me working while he stayed home with our son. now that the kid is grade school aged we are transitioning back to a two income family and the hardest part is not spending to our income level. i know we can make it on one salary…we did it for years, why is it so hard to just bank his money?!?! i need to set up automatic transfers quickly.

  • My mom was always a stay-at-home mom, from Day One, which worked fine since my parents were never big spenders. Since they immigrated here and didn’t have any family or friends to help them during hard times, they prioritized “security” first and foremost. That meant paying off the mortgage as quickly as possible (which they did in less than 10 years) and starting my college fund before I was in kindergarten (they ultimately could afford to send me to an out-of-state university). I think I learned most of my PF skills from them!

  • We went from a 2 income household to a 1 income household for a few months and I was surprised how we were getting by. It made me think we could’ve been using that second income to get out of debt and build up an emergency fund. Now we know better.

  • We used to be duel income earners but my wife is now part time. She teaches piano and can work from our house. This definitely saves us money on child care. Pay for someone to take care of our 3 small kids would be expensive, plus the gas we save from only driving one car. We both know its better to have just me as our sole income earner, plus my wife can work on her websites and other hobbies she likes.

    • Len Penzo

      You make a great point, Ben. For many families, if they ran the numbers they’d find as you did that it’s actually less expensive for one parent to stay home than it would be to pay for childcare.

  • Samuel S

    I agree whole-heartedly. My wife has already said she plans to be a stay-home parent. That doesn’t mean she can’t work though; she’s already planning to work form home, so that she can be there for the kids AND bring in some extra income.
    Frankly, she’s going to get the better end of the deal. I’m planning on being as financially smart as possible, so I spend as much time with them as possible.

    • Len Penzo

      Good for you, Samuel! You don’t need to remind your wife she is getting the better end of the deal though. (That is, unless you don’t mind sleeping on the couch.) ;-)

  • Julie

    We are a dual income family by choice. We live on less than one person’s salary, and save the rest for retirement and college.

    To be honest, we do it because I cannot stay at home. I start climbing the walls from boredom when my maternity leave gets too long. Instead, I do all the things that need to be done in the house and take care of the kids when I get home and every weekend. Along with this, I get to enjoy mentally challenging work 5 days a week.

    I am on a flexible schedule so I pretty much pick up my kids after afternoon nap and we play until dinnertime.

    • Len Penzo

      I certainly understand where you are coming from. I realize lots of parents would go stir crazy at home. I know I would.

    • Gigi

      Yikes! Surely you don’t mean mentally challenging work cannot be found by staying at home? I loved it when I was able to stay home. I found plenty to keep me engaged and occupied aside from the housekeeping and childcare and I have a degree in mathematics.

  • We are a 1.5 income household now. We have been 1.0, 2.0, 1.5 and 1.4. No matter how much I work, my income will never be what it could have been had I decided to focus on my career instead of staying home. However, I don’t care about that at all. We live just fine, and being home with the kids have been fantastic. Even when I did work, I worked from home and it was part time, so I have had incredible flexibility. However, ever since I quit many years ago and then went back to work part time, we always treated my check like a bonus to be spent on savings, vacation, or paying down the house.

  • Len Penzo

    I know you’re good with money, Kris. :-)

    How do you get a 1.4 income family? Does that mean you work only 2 days per week?

  • Susan

    I became a full time stay at home mom after my 2nd child was born. Now it is 17 years later and from my observation the most successful dual income families had 2 things: One partner had great flexibility in their schedule, and they had massive outside support…such as willing grandparents or other family members or paid help to pick up the slack. I have returned to work part time now that the kids are in college, but am now thinking of going back to school myself. Both my kids report that they hope to marry women willing to stay at home with their kids…they appreciated having me there.

  • [...] Penzo with Are Two Household Incomes Really Better Than One?  Not for everyone, but it works for [...]

  • [...] Len Penzo asks if it is really better to have two incomes than one.  I totally agree with one point (and the whole post):  quite often, people spend as much as they make, and financial risk is there whether you have two incomes or one.   People take out mortgages based on two incomes, buy expensive cars, etc.   Some people will just always spend as much (or more) than the household takes in. [...]

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