Could you and your partner live on one salary?

18 Comments

One of the things my fiancé and I are considering doing once we tie the knot is switching to live on one salary. It might seem a little extreme, but the financial reward is so massive it’s hard to find any flaws with the plan.

Could you and your partner live on one salary?

We’ve been talking about it for a few months, and we think after our wedding in October, we’ll be in the right place to switch to living on only one income. If you think we’re crazy, here’s my rationale:

We can afford it.

I think one of the best things about going back to school for my MBA was I was forced to live like a student, and even now that I’m employed full-time again, I’m still living a more modest lifestyle than I would (or will) when I get used to my income. My fiancé is just one of those naturally frugal people, and thankfully has never been foolish with his money. As a result we have only one car between us, we eat most of our meals at home, don’t shop excessively (ok, not too excessively), and have inexpensive hobbies.

Additionally, most of our purchases, from groceries to concert tickets, are already bought together and therefore already coming out of one bank account. So we’re used to sharing money.

We’re both high earners, and the combination of modest living with powerful paycheques leaves a lot of breathing room. I make slightly more than my fiancé (though he recently got a promotion, so the gap is narrowing), which factored into our decision about whose salary to save and whose to spend. Both of us individually make enough to pay all the bills and still have cash left over, but when it comes to picking which cheque to keep in the bank, the bigger one is clearly the better choice. It’s an incredible position to be in, and we want to maximize the benefits of it. I know it’s a luxury to not need two incomes to support two people, and I am very grateful we are in such a position.

How would we do it?

We’d live on his salary while splitting mine equally between our individual savings accounts. In other words, his full paycheque would be deposited to our joint chequing account, and my paycheque would be dividend in half, with each of us receiving the same amount to deposit in our TFSAs, RRSPs, and unregistered savings accounts based on the most appropriate asset allocation. If any of his salary is leftover in our joint chequing account at the end of the month, we’ll transfer it to our joint savings account. This means we’ll be living on 40-50% of our incomes while saving the rest.

It’s easy to use up your salary when you have to split it up into bills, saving, and spending, but if we allocate all my income to saving and all of my fiance’s to bills and spending, it actually feels like more. It’s not, of course, it’s the same number of dollars just allocated differently, but it reduces the burden of budgeting to something fundamentally simpler: two paycheques, two categories – spending and savings. Furthermore, much like contributing the same amount to our joint chequing account, divvying up our money equally keeps any “mine and yours” arguments away because everything is appropriately “ours”. I never want money to be something we worry or fight about, and this is another way to protect against that.

If this is such a great idea, why wait?

It’s tempting to execute this plan immediately, but we’re choosing to wait until the marriage papers are signed for a number of reasons, not the least of which is legally becoming husband and wife before merging assets and incomes. Furthermore, we’re still slightly off-balance individually, as I’m still paying for my MBA and am only 3 months into my new job. We’re taking the months before our wedding day to balance our accounts the way we want them before we go all-in together. For example, he has more in his TFSA than me because I used my savings to go back to school, but I have more in my RRSP because I started saving earlier. Both of us want to “catch up” in our respective registered accounts, so that when savings is distributed equitably from my paycheque, we’re each saving the same amount. We also have the expense of the wedding itself, which some things we are paying jointly for (like the venue) and others we are paying for individually (like my dress and his suit). Ultimately our money is our money from now on, but for the ease of bookkeeping we’re procrastinating this plan until after our nuptials.

Would we do it forever?

Aside from saving in an RRSP, I don’t like to make plans more than 3 or 5 years out. I can’t predict our lifetime earnings, stock market fluctuations, or what kinds of challenges will befall us individually or as a couple. I do know living on one salary is a powerful defense against one partner being laid-off, and that provides a incredible amount of financial security. This is coupled with the financial security provided by amassing a huge amount of savings by banking the other partner’s income. But what we can afford right now is not the same as what we can afford forever. However, if our incomes grow with career progressions, there should be no reason why we can’t commit to living on one income for the foreseeable future.

Crazy or genius? Could you and your spouse live off of just one income?

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18 Comments. Leave new

  • Doing it right now, since we only have one income, and not by choice. I guess it’s good practice for later.

    Reply
    • Yeah because my fiance works in oil & gas and the price of oil is tanking, living on one salary (especially the smaller one) is protection against any potential job loss… scary, but better safe than sorry.

      Reply
  • That is the power of being higher earning DINKs – if you don’t subscribe to too much lifestyle inflation, you can bank a lot because there is lots of “gravy”.

    We do a variation of this, with a lot of my would be savings going to debt. Currently have one 8 y/o car with no plans to add another one in the foreseeable future. It’s a nice option to be in.

    Reply
  • Sounds like you have a great plan in place! We’ve been living off of less than one of our salaries for years and saving the rest. We combined all of our accounts when we got married 6 years ago, so we don’t strictly divide up our salaries (they’re both deposited into the same account), but our annual living expenses are less than one of our salaries. It’s a great thing to do while you’re both working!

    Since we’re planning to both quit our traditional jobs and move to a homestead in the woods in a few years (at age 33), we’ve needed to save a very high percentage (65%+) of our incomes, which has worked well for us. Congrats to you for planning this out before you’re even married–that’s awesome!

    Reply
  • I don’t have a partner, or another paycheck, but I live on about 50-60% of my (not high) income right now, so I know it theoretically could be done! The money I’m putting to savings right now would go to extra food, housing, etc, and we could bank his theoretical paycheck. 🙂 Anyway, it’s an amazing position for you to be in, and you should definitely take full advantage of it if you can do it while also not totally depriving yourselves.

    Reply
  • We could do it. But only if one of us was a stay at home parent. Daycare is stupid expensive and eats a large chunk of our income (not enough to make it not worth working, especially since we both really like our jobs)

    Of course doing it like you are doing it, we could not at this point.

    Reply
  • I think it’s a great plan! $ wise, we’re totally living off less than the lower of our monthly incomes once 401(k) contributions are taken out. I mean, I’m personally living off of about 35% of my income.

    I like your plan to wait until the wedding though and I love that you guys are figuring this out now! We spent months figuring out how to split expenses when my boyfriend moved in and it made moving in so easy!

    Reply
  • Yes, but it would be quite spartan. It’s nice to have a grasp on the changes we would need to make in our lives should we ever be forced on one income.

    It’s also nice to know the salary that each of us needs to be at in order to make single income living possible because we don’t go after jobs that would pay less than that amount. Considering that we’re both moderate earners this helps us ensure that a job loss (or a pay disruption) wouldn’t be a catastrophe.

    Reply
  • That’s super impressive! I’d say genius!
    We’ve been sort of living off one income for a while, but not by choice really… My fiance had knee surgery and works a physical job, so he was off work for a good portion of 2014 or only working part time, so we have been mostly living off my income, and now that he’s planning to go back to school, we will be doing that again in the future. We have been lucky this year though as I had a lot of overtime that helped us keep up with expenses. We would need to work on being a bit more frugal to really be comfortable with it I think.

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  • Yes.. except we’re freelancers so that doesn’t quite work out the same way. I do know a lot of other freelancers who have spouses who work, and they just live off that income & bank the freelancing cash.

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  • When we got married, my husband and I decided to live off of my income only, because he wanted to go back to school full time. We’ve taken on some debt, but we’re okay. We figured better to do it at the start of our marriage, before we own a home or have children. Things will definitely be easier for us when we go back to having two incomes, though, in terms of debt repayment and saving. But… We roll with life as it comes, and try to be as prepared as possible. Best wishes.

    Reply
  • Avatar
    Aleksandra Sagan
    January 3, 2015 11:12 am

    Interesting plan! I’m curious to see how this will pan out for you… After reading the post, I did some quick calculations to see if we could do the same (assuming we wanted to)… I think it could work! But, we’re not quite there yet with splitting our money quite so freely. I think it’s smart of you to wait until you’re married to go through with it.

    Reply
    • Yeah the married thing is really important to us, just seems reckless to combine everything before.. even though technically after 1 year living together in Alberta, you’re common-law so the marriage rules apply (from my understanding). But even that would mean next August.

      Reply
  • That seems like a great idea, Bridget! Too bad you won’t be able to benefit from Stephen Harper’s Family Tax Cut. You need a child to do that. Just one more reason NOT to vote Conservative in 2015.

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  • I was just discussing about this with my fiance as we are getting married in June and our plan is to make things simpler by simply combining our incomes via a joint account.

    I’m a firm believer in the fact that if you can’t trust your partner with your money, then you really need to pause and reflect on your idea of a marriage.

    Another great post you have here.

    Reply
  • We’ve always ended up doing this, working together on our finances as I went through university and random jobs along with it. He’s always had steady income and me not so much now that I’m a teacher going from contract to contract. We’ve been married two years and have managed to buy our forever property with not so forever home and paid off all our debt. My next plan is to be smart, paying off our mortgage as soon as possible and saving. This post and your blog has been very helpful. Our plan is to live off his income, and put mine towards extra payments on the mortgage principle and into our TSFA’s and RRSP’s. Now to do all the math! I hope this is doable

    Reply

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