We work with many clients who have a dual income household. They’re usually married and both spouses are professionals in demanding fields, and often, they also have children.

Undoubtedly, at some point or another, these clients face an important question: should they go from a dual income household to a single income one?

Whether this question arises before the first child, after, or once even more children are added to the family, having one parent stay home to raise those kids is almost always an important consideration.

This is even more true if you’re doing your financial planning in a place like the Northeast, where childcare costs are notoriously expensive and can easily cost as much per month (or even more!) than the mortgage payment on your house.

Given that, the answer to dropping an income and moving away from a dual income household is not so obvious. What you might lose in income, you could make up for in savings. It’s a tricky balance to strike, and much depends on your specific situation (not to mention what you and your partner prefer and want for your family).

If you and your spouse are thinking about going to a single income, here are some things you can consider to help you get clarity on what’s right for you.

Test Out the Financial Reality

The idea of dropping an income and going from dual income household to a family with just one income earner can feel impossible. But have you run the numbers? If not, the first step is to make a mock budget and see what your finances might look like with one working parent and one stay-at-home parent.

Obviously, the inflow side of the equation will go down. But look at your expenses, too. What costs could you cut? These might include childcare, transportation, meals out, and more if one spouse no longer needs to work a full-time job.

Once you draft your sample budget, review it together. Does it seem doable and realistic? If so, the next step is to put that theory to the test. Try a test run with this new budget as best you can, and pretend like you have to live on one income, starting now. Can you make it work?

Use your “new” budget for at least one month, but ideally three or four to see how it goes. The added benefit of this experiment is that you’re actually still earning two incomes, so if you reduce expenses during this period that should free up additional cash flow. You can put that money straight into savings to extend your emergency fund, a smart move to make if you do transition to a single income.

One of our clients tried this, and reported that it was one of the most helpful things to do to help make the final decision. “Living off one income before we made the switch to single income definitely took some work, and some tough conversations on where to cut and what to keep.”

Think About How Long You’ll Be a Single Income Household

Another big consideration in this decision is how long you expect to run your household on one income — because nothing says you can’t return to dual income household status in the future.

SIt down with your spouse and talk through the following questions to establish how long would be a good time period to live as a single-income family:

• How long do we want to have one parent stay at home and not earn an income? Will it be until the kids start school? Or will one of us be a stay-at-home parent until the kids go to college?
• What is our Plan B if living on one income isn’t right for us, or something changes? What’s our “exit strategy” if we need to revert to a dual income household?
• Will the person who leaves the workforce have the ability to jump back in when needed (or desired)? Do they have a skill set that will stay relevant?
• Are there in-between measures we could take (like working part time or from home)?

Getting clear on your answers to these questions will allow you to back into a financial plan that works for your family. Living on one income for 5 years before your child starts school, for example, is much different than planning for one parent to stay at home for the next 18 years until your kids start college.

This will also help you decide on the kind of emergency fund that feels right for your situation. Normally, we advise clients to keep at least 3 to 6 months’ worth of expenses in an emergency fund. But that might look more like 6 to 12 months’ for a family who wants to transition from dual income household to single.

It’s always smart to build a buffer into your savings, and aim to have more than you think you will need.

Don’t Discount the Emotional Side of the Decision

Even if going from a dual income household to a single-income family makes financial sense, it might not necessarily feel good from an emotional standpoint (at least, not right away).

Any big transition is tough on a family, and when you throw finances into the mix, things can get complicated. It’s important to acknowledge that the non-working spouse might have a lot of conflicting feelings about their new role, especially if they really valued their job or ability to contribute to the household finances.

My wife, Amy, was very uncomfortable at first when we decided the best move for our family was to have her be the stay-at-home parent. She felt uneasy about not having her “own” money that she earned at her job.

We always contributed the majority of our money into a joint account, but we also each had our own checking account for “play” money; we could use this money for whatever we wanted, and it came from our own paychecks.

We kept these separate checking accounts even when my wife wasn’t working. The fact that she wasn’t contributing to this was tough for her to adjust to, but it also wasn’t forever. Eventually, we made the decision for her to go back work in part so I could start Lake Road Advisors in 2016. She went from not contributing to being the main breadwinner for more than two years!

This illustrates another important point to keep in mind when making this decision: it doesn’t have to be a permanent change. If, for whatever reason, your family decides that both spouses should work, then you can make the transition back. Don’t feel like you’ll be stuck forever with your initial choice.

Stay Focused on What’s Important

Almost every family who makes the decision to have a spouse stop working and stay at home to raise children struggles with the choice. It’s not an easy one, and either option – whether you stay at home or have both parents continue to work full-time – comes with pros and cons.

Remember, nothing is all good or all bad. As with most things in life, you have to make trade-offs. Here, the fact is you may give up some financial flexibility by moving away from a dual income household. And if you number-one priority is that flexibility, then becoming a single-income family might not be the best choice.

That’s why it’s critical to understand your goals and what’s most important to you. Take some time to consider your goals and your priorities, and then let those factors guide your financial decisions.

Lake Road Advisors, a Fee-Only, independent financial planning firm with offices in Corning, NY, Ithaca, NY and Portland, OR works with clients virtually all across the country. Paul Sydlansky, the founder of Lake Road Advisors LLC, has worked in the financial services industry for 20+ years. Prior to founding Lake Road Advisors, Paul worked at Morgan Stanley in Manhattan for 13 years. While at Morgan Stanley, Paul was a senior-level manager within the Institutional Equities Department. In 2018 he was named to Investopedia’s Top 100 Financial Advisors list. Paul received a Bachelor’s degree in Economics from Marist College and holds an MBA from New York University Leonard N. Stern School of Business. Paul is a CERTIFIED FINANCIAL PLANNER™ and a member of the National Association of Personal Financial Advisors (NAPFA) and the XY Planning Network (XYPN).