Changing things up.

So Girl Ninja and I established a rule that we will live on my income and save hers. Since she wants to stay at home with our future kiddos (at least until they start grade school), we figure it’s easiest to pretend her income just doesn’t exist. That way, when it goes away, we wont miss it. You can’t miss what you haven’t had, right?

Currently, both of our paychecks are direct deposited in to our primary checking account each pay period. Throughout the month, I will login to our various accounts and pay our bills (most of which are paid out of our checking account). As the end of the month draws near, I’ll take whatever is left in our checking account and throw it in to our savings. Nine times out of ten, this amount is equal to, or greater than, Girl Ninja’s income for that month. Kudos to us, for following our rules. 

BUT….

I have to admit, we are kinda breaking one of the most important PF rules known to man. If you paid attention to what I just wrote, you’ll notice we are paying ourselves last, after all the bills have been paid. This has worked fine for us in the short-term, but probably isn’t the wisest long-term solution.

We’ve decided it’s time to be much more proactive in practicing what we preach. Upon our return to Seattle, Girl Ninja will set up a new direct deposit with her school. Instead of her income going in to our checking account (only to be moved to savings a few weeks later), all of her income will go straight to our savings account, as though it’s never existed.

This forces us to be much more aware of our spending patterns. Without Girl Ninja’s income padding our checking account each month, we might realize just how difficult it is managing money on one person’s income.

I don’t imagine much will change since we already have relatively frugal spending habits, but at the very least this forces our behavior to be more consistent with our stated goals: Paying ourselves first and TRULY living on my income. 

How many of you do (or plan to) live on one income if/when children come in to the picture? Do you REALLY pay yourself first, or like us “pay yourself first” at the end of the month?

Favorite Nail: It doesn’t matter how old…

30 thoughts on “Changing things up.

  1. Gotta pay yourself first. Anything less is just fooling yourself into temptation. Paying yourself first imposes a discipline on your commitment.

    And if an unexpected expense comes up, well… that’s what emergency funds and updated plans are for.

  2. When I opened a savings account last year for the first time since high school, I had an option to put a recurring transfer in to it. I set that up for a specific number to transfer on each biweekly pay period day. It’s a little high right now for my current income in graduate school, but I have a good buffer in my checking account that I don’t move around between checking and savings. So I suppose that I pay myself first, but I don’t really pay attention to what’s left at the end of each month, I just concentrate on keeping track of my spending and trying to keep it within my budget or certain targets. Interest rates are low enough that I don’t earn a lot extra by moving money around a lot, and this way I’ve never been hit with an overdraft fee. My landlady takes her sweet time cashing my rent check sometimes, so that’s a factor too.

  3. We pretty much live on one income right now and the other half goes towards debt and savings.. Hasn’t always been this way, but now it is.

  4. We want to buy a house in the near future, so we are saving like crazy for a down payment. Therefore, we are living off of my husband’s base salary and all of my paycheck and his bonuses go into our savings. Once we buy the house, we’ll either save my money for retirement, or use it to pay down the mortgage faster. An added bonus is that we can rest assured that if either of us lost our job, we’d be just fine.

  5. We are planning on me staying home once we have kiddos, so we live on my income, and use my husband’s to pay off debt and save. Half of his check goes directly to the savings account, and the other half goes into a special ‘debt payment’ account. He makes quite a bit more than I do, so once we start living off his income (all our debt should be gone by then!) it will almost be like getting a raise!

  6. We transfer money to our savings accounts at the start of the month, and our Roth IRA contributions automatically come out on a biweekly (for me) or weekly (for my husband) basis, but we always plan for those. I consider that we have paid ourselves first because we never change the amount we save based on the status of our checking account.

    I would like to live off only my husband’s income after we graduate so that I have the option of staying home for a few years after we start having children. I don’t think we’ll be able to do that if he gets a postdoc (that would be less than our current combined stipends) but only if it’s a real job.

  7. I kinda do both, pay myself first and last. My government mandates 20% into retirement account (with a mandatory 16% match from employers). Then I pay into a savings endowment. I then make a game out of seeing how much extra I can squeeze from the rest of my budget at the end of the month. Its been working pretty ok so far.

  8. This sounds like a good move to be a bit more strict with your finances. When I was with my last girlfriend there were times when we were living off either her income or mine. We were pretty lazy with our finances though. Mostly we just paid any necessary bills and coasted. Big mistake.

  9. I’m with GN with wanting to stay home until the future kiddos are in grade school. They are only babies once! Should cherish it while you can.

    Once BF finds a better and high-paying job I think we will put this to use and save all of my income, and spend all of his. Although he has to pay for school loans, so maybe we will start with saving 3/4 of mine.

  10. I’ve been a stay at home mom for almost 9 years now, so we only have one income 🙂 When DH gets paid we immediately have some sent to the Roth 401k, and we have automatic transfers set up on each payday to put money into our account for irregular expenses and our “Debtinator” account which we use to pre-pay our mortgages. It works for us – we just paid off our rental last month! WaHoo!!!!

  11. I think keeping expenses low enough so that if the worst happens, someone loses a job, you can still float the boat. My wife and I planned it this way when we bought our house. 4 years later and she is in a 3 year grad program that doesn’t allow her to work. We haven’t had to change our style of living because we thought ahead, and didn’t buy all the house the bank said we could afford. Plus she was able to take this opportunity without worrying about the financial stuff in the mean time.

  12. I think the ‘pay yourself first’ concept was born in an era when nobody had instant access to every account they have.

    If it is 1987 and you pay yourself first into some random savings account, then that money really is somewhat ‘unavailable’. Accessing that money usually required a real live trip to the bank.

    In 2012, direct depositing money into another account that shows up right there in your account list that can be viewed and adjusted in seconds from your phone or PC is very different.

    If you have a budget and keep track of every dollar I don’t think it matters whether you pay yourself first or last. It’s just a mental shell game.

    • Good pont. So long as you save an appropriate amount, so what if you pay yourself first, second, or 43rd.

    • Agreed. I bank with ING Direct and transfers within the bank are instant. I imagine most banks operate this way.

      Ninja will probably get a clearer picture of his spending though, since I know he has OCD like me and checks online accounts 2X a day. 🙂

  13. I use to always pay myself first. It was our #1 priority, however that has changed completely. It’s now, bills, necessities then us. I hope to one day go back to being us first.

  14. We pay ourselves first. It’s easy to do since it’s the 2nd line item on our budget – 1st is giving. We have been living on one income for 10 years now and it’s manageable. You just need to set your priorities.

    You and GN are such young inspiring adults with your entire future in your hands. You’re possibilities are endless.

  15. I am in a different time of life, my kids are grown. I do have a payroll deduction for my 403B, IRA and Roth IRA. In other words, I pay myself first.

  16. That sounds like a plan!! I do pay my savings automatically but it’s only $10/paycheck. Then the rest of the month I try to divert 10% or more of side income into savings. It’s really small at the moment, but the ACT of saving has been important to me. My BF also opened a ING savings account but hasn’t started contributing to it. We’re still trying to manage all our expenses and keep them under income (just barely doing that). But we’ve both changed a lot from where we were (“SPEND!!! Nothing’s too good for us, buy it NOW!!”) We’re maturing :0)

  17. I’ve been married for 21 years and my wife has never worked. So, we never had an extra income as padding to fall back on. I have been Paying Myself First since I turned 21. Taking the money out right away is the only thing that has worked for me, especially when were starting out. Back then, our kids and income were small and our bills were large. But, we always saved something.

  18. I do a mixture – with our current income levels and expenditures, we can’t make it on one paycheck, but I do a ton of automatic savings transfers into earmarked accounts and I have a sizable contribution going into my 403(b) accounts at work (5% into a matched account, 5% into an unmatched account, and 10% matching comes from my employer). Extra money goes towards additional debt payments.

  19. Since direct deposit for her work was a pain, we just transfer her whole amount when she gets paid. Luckily, I make more so we can live off my income and put her whole paycheck to the baby fund, debt repayment, and savings.

    Sure would suck if she made more money and stopped working to raise our newborn.

  20. We live off my husband’s income and I am a SAHM to our two kiddos, ages seven and one. I’ve been staying home since our oldest was about 1 1/2 years old. In the beginning it was really hard to adjust but over the years you learn to adapt and income (hopefully) increases. DH doesn’t mind if I never go back to work but I suspect I will someday. If so, I would want to save my income with the intention of enabling us to retire earlier and enjoy our golden years together.

    We have specific savings goals that are deducted weekly so I just jot them down in my checkbook register as soon as I enter the deposit. I find that without having a specific goal in mind it is more difficult to consistently save and there’s always “something” that seems to merit using that “extra” money. I try to keep “wants” in check by obsessing over my long term goals and the freedom and flexibility that meeting those will provide.

  21. Well, let’s see. Late 90’s we started saving DW’s entire paycheck and part of mine for down-payment on house. 2 months before settling on the house in 2000, our first 2 children were born (yes, twins). We had saved 20% down including closing costs out of pocket. Money got really tight because we wanted DW to stay at home with the kids (and daycare is very expensive), but we managed. Starting paying down debt aggressively which meant very little fun money aside from a vacation every year, but rarely bought clothing for either one of us, but found ourselves still wanting to spend more to enjoy life. Spent money to fixup the house a bit (finish basement, landscaping, eventually had to get a new vehicle when 4th child was on the way).
    So, 11 years later, we set about making sure to set up a plan. Pay minimum payments on debt first, then put 10% away, then put extra money onto a single debt payment. Well, 12 years later, we’ve paid down some debt to the point where we can put aside almost 20% of our single income as a combination safety net and retirement savings for myself and her.
    Difficult? … at times. Worth it? … in our eyes yes!
    She’s considering taking on a job now, and if she is offered a job and accepts, about 10% of her pay will be for her to spend on whatever she wants. 5% more taken for increase in fuel, etc. to get to/from work. 15% will go towards taxes. The rest will go into savings/retirement accounts.

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