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Learning to live on less is never easy. Sometimes it’s voluntary, like when a spouse decides to stay home to take care of children. Sometimes the decision is made for you. If one half of a couple is laid off, living on a single income might be the only option for awhile. In a slow economy, if you’ve lost your job or business, replacing that income might take longer than expected.

Whether long term or short term, temporary or permanent, by design or by accident, it is possible for your family to live on a single income. If you’re accustomed to having two earners, you will need to make some changes in your lifestyle. The following are some tips on how to prepare for living on one income, as well as some suggestions on how to make the most of being a single-income family.

Prepare in Advance

If you’re planning on downsizing to one income, now is the time to start preparing for the transition. Even if you don’t expect to be living on just one income, you should be prepared for the possibility. It might not happen, but if it does you can slash the stress by following a couple of simple steps.

• Set aside an emergency fund. Aim to save enough money to pay for at least three months of income as a contingency fund. If you intend to downsize to one income on purpose, talk to your financial advisor to learn how much money you should set aside to make the transition easier.
• Make sure you’re covered with the appropriate insurance, especially life and disability. If possible, ensure that you can continue to pay for family health insurance even if one spouse loses his or her job. If you’re laid off, COBRA can help to temporarily maintain coverage while you look for a new job; however, if you are choosing the single-income lifestyle, you’ll need to find a more permanent solution.

Examine your budget

Living on one income means living on less, so you will need to spend accordingly and adjust your lifestyle as needed. Figure a baseline budget (what it takes each month for the essentials), and then add in the extra budgetary items. Don’t guess. Use your bank, credit and debit card statements to realistically estimate your expenses and to help you avoid overlooking smaller items. A streamlined budget might seem like an obvious consideration, one that goes without saying, but it leads logically to the next point.

Resist the Urge to Charge

Since you’re living on less, it can be tempting to use credit to make up the difference. Fight the temptation. If you’re unable to pay off the balances each month, you will be faced with recurring monthly payments and interest charges. If you can’t keep up, it will cost you even more in late fees and your credit will be damaged.

If you have an emergency fund, use it wisely and find ways to cut spending. Buy secondhand clothing, eat at home instead of dining out, drive a used car, live without cable or satellite TV, clip coupons and ask your cell phone provider if they can set you up with a more economical plan. Look for ways to save money on the basics, and limit the extras to what you can truly afford. Take advantage of the savings you will enjoy because only one spouse is working: reduced automobile expenses, no outside childcare, downgraded clothing expenses and other savings that result from the situation.

Innovate and Diversify

Just because you’re living on one spouse’s income does not mean one or both partners can’t earn some extra household money if the opportunity arises. If a part-time job is feasible for the nonworking partner, you might be surprised at how many basic bills a few hours each week can pay for. The working spouse can volunteer for overtime or try to earn a sales bonus. If you have unwanted items, sell them online or have a garage sale. Living on a single income sometimes requires innovation and creativity. If you keep a positive attitude and enjoy a challenge, you can even make it fun.

Remember Retirement

Finally, even though your income might not be what it was with two earners, it is important to keep investing and planning for the future. Part of your income might have gone away, but the need for funding your eventual retirement has not.

Talk to a financial planner or tax professional to help prepare for the possibility of your family living on a single income. With some smart financial planning, a single-income lifestyle does not have to be a financial hardship.