How to Raise a Family on Less Than Two Incomes: The Complete Guide to Managing Your Money Better So You Can Spend More Time with Your Kids - Softcover

Topolnicki, Denise

Softcover

ISBN 10: 0767905652 ISBN 13: 9780767905657

Publisher: Broadway, 2001

Synopsis

Many parents today believe that two steady incomes are not only desirable but absolutely necessary in order to raise a family. Yet most full-time working mothers say that if it weren't for the money, they would not work, and instead would stay at home with their children. After the birth of her second child, Denise Topolnicki faced this common dilemma: Continue working full-time, or spend more time with her family? As a former editor of Money, Denise used her financial expertise and discovered that she could work only part-time and be at home for her children--while not breaking her family's budget.

By combining her investment know-how with compassionate advice, Denise gives parents a clear-cut strategy for controlling their money--from saving on food, to creating a cash reserve, to learning how to retire on less than two incomes. Packed with worksheets, detailed plans, and inspiring case studies, Topolnicki's plan helps families set fun priorities while still balancing the checkbook. Whether you want to leave work altogether or continue part-time, this book is the key to freedom for millions of families trapped on the working-parent treadmill.

About this title

About the Author

During her twelve years at Money, Denise Topolnicki wrote and edited hundreds of articles on all aspects of personal finance. An award-winning writer in business journalism, her writing has appeared in numerous magazines and newspapers across the country. She lives with her family in Ridgewood, New Jersey.

Reviews

After having her second child, Topolnicki, a former writer and editor for Money magazine, wanted to build a freelance writing career and spend more time with her children, though her financial savvy led her to wonder whether having only one full-time salary would dramatically alter her family's lifestyle. After taking a long, hard look at her expenses, savings and child-care bills, she quickly realized that making her own work hours and eliminating a lengthy commute would not mean that she'd have to penny-pinch. There were some cutbacks--more activities closer to home, fewer high-priced lattes--but Topolnicki has compiled her best strategies and advice to convince readers that most people would benefit from having one parent stay at home. In addition to detailing her own experience, Topolnicki offers insights from her interviews with other parents and includes their tips as well. She covers the basics of money management--budgeting, mortgages, retirement funds, insurance--in intelligible detail. Though solid, her conversational, friendly style is almost too simplistic. This book will best serve people who are intimidated by money matters and who haven't read other personal finance primers. There's lots of useful information here, along with some "thrifty" advice on price clubs, groceries and play groups that seems awfully familiar.

Copyright 2001 Cahners Business Information, Inc.

Excerpt. © Reprinted by permission. All rights reserved.

Part One

CHAPTER 1

Get a Grip on Your Spending

If you don't know how much money you spend or what you spend it on, you're not ready to hop off the two-income treadmill. You've got to know where your money goes if you want to start living on less without drowning in debt.

Sure, tracking expenditures is tedious, but I guarantee it'll pay off big. When I got a handle on my spending, I realized that my husband and I were together blowing about $45 a day in cash! That's more than it would cost us to eat out every night. What were we spending that money on? The list was long, so I'll name just three little indulgences that'll be familiar to many two-income couples. My lunches, because I was too busy every evening to even think about brown bagging it the next day. Taxi fares, so my husband and I could work past 5 p.m. and still rush home before we had to start paying our nanny overtime. Saturday lunches out, because we often spent the entire day doing errands that we didn't have time for during the work week.

The parents I surveyed spent lots of money on other types of goods and services when they tried to live the two-income lifestyle. Do any of their stories ring a bell for you?

Nancy Krzywicki, an ex-magazine editor who now freelances part time so she can spend more time with her five-year-old daughter, recalls dropping about $40 a month on dry cleaning when she worked in Manhattan. She used to spend $150 getting her hair cut and colored every five weeks. Now she waits at least eight weeks between salon visits, and saves about $500 a year. "I've also given up manicures," she says. "I never liked them but felt I had to have my nails done when I worked in a full-time office job."

Before they had their first child two years ago, April and Ben Orseck were so busy working that they ate out four times a week. Now that April stays home with their two children, the Orsecks go out to dinner only once a month. April even packs a brown bag lunch for Ben daily.

Yvonne Lowry quit teaching after the third of her four children was born. She and her husband Tom, a packaging designer, dipped into their savings to pay off their car loan. They also let their cleaning woman go and, of course, stopped sending their kids to day care. With hardly any effort, they slashed their expenses by $1,300 a month.

When Amanda and Neil Pinder both worked for her father's computer consulting company and had one son, careful shopping wasn't a priority. Then came triplets, and suddenly the Pinders had four kids under age two. Says Amanda, who's now a stay-at-home mom: "When I worked and had just one son, he had an outfit for every occasion. Now all four kids have a fairly sparse wardrobe." Amanda also used to spend more on each item, like the $90 winter coat she had to return because its zipper jammed. "Now I wouldn't pay more than $30 for a kid's coat," she says.

What will you find out by using the worksheet in this chapter to track your spending? You'll discover the following five crucial bits of information:

1. You'll learn how much money you'll save if you quit your job and simply cut out work-related expenses. Just think?you'll be able to kiss child care and commuting costs good-bye.

2. You'll see how much you spend on discretionary items, and you can plan to trim those expenditures through sheer willpower. If you eat out two or three times a week, for example, you can vow to reacquaint yourself with your kitchen. You might also cut back on the number of lattes you buy each week.

3. You'll see how much you spend on necessities like groceries, insurance, and health care. Having a handy record of these expenditures will help you figure out which ones you can cut?and by how much.

4. You'll find out what you do with (almost) all of the cash you pull out of automatic teller machines.

5. You'll know how much?if anything?you're saving now. That will be useful to know when you read about how to keep?or start?saving after you give up all or part of your second income.

You can use the worksheet on pages 9 and 10 to record your expenditures. Pencil in how much you now spend on thirty items from cable TV to wheels under the column labeled "Current Amount." After you've finished this book, fill in the column labeled "Future Amount" to reflect spending cuts you plan to make.

I really want you to fill out this worksheet completely. So, I've included simple, line-by-line instructions. I don't ask for any numbers without telling you where to find them. And I swear that the whole exercise should take no more than a couple of hours. (You'll spend even less time on this project if you already track expenditures on a computer program.) A couple of hours may seem like a lot of time, but it isn't really when you consider that you're creating a road map to a saner and more satisfying family life.

If you're already using computer software like Quicken to record your monthly expenses, pull up your documents for the past twelve months. Add up how much you spend on different items, like child care, groceries, and utilities. Check your list against my worksheet to make sure you haven't missed anything. If you have, figure out how much you spend on those items by using the methods I suggest in this chapter. Then go on to Chapter 2.

If you don't know where your money goes, get ready to find out. First things first. Pick a time to do this project when you can really concentrate on it. If you already have kids, don't try to fill out this worksheet until after you've tucked them in for the night. Next, get settled. Gather the following documents and supplies, and brew a cup of coffee or tea to sip while you work:

* A lined writing tablet.

* Two sharp pencils with clean erasers.

* Your checkbook registers for the past twelve months.

* Your credit card (American Express, MasterCard, Visa, department stores, etc.) statements for the past twelve months or annual summaries of charges.

* Statements for your brokerage, money-market, and savings accounts.

* Statements for your other investment accounts, if any.

* Your pay stubs and your spouse's.

* Your monthly mortgage statements or payment coupon books.

* Monthly statements or payment coupon books for your home equity, personal, or student loans.

* The last federal, state, and local income tax returns you filed.

* A calculator.

Spread everything out on a desk or table. Now take the following four steps:

1. Copy the thirty categories listed on the master worksheet on pages 9 and 10 onto separate sheets of paper from your writing tablet. For example, label your first sheet of paper "Cable TV," the next sheet "Cash," and so on. You'll use the sheets to record how much you spent on each of the thirty items over the last twelve months. After you've recorded all of your expenditures, add up the amounts on each sheet to get a grand total. Then jot those numbers down on the master worksheet.

2. Flip through your check registers and record all payments that belong under one of the thirty headings on your thirty sheets of paper. Every time you write down an amount, make a mark next to that entry in your check register. Alternatively, highlight the entry with a yellow marker. That way you won't count any payments more than once.

3. Comb through your credit card statements. Put all of your charges under one of the thirty headings on your thirty sheets of paper. For example, if your Visa statement from last January includes charges from Sears and Toys 'R Us, you can probably assume they represent holiday gifts. So enter them on the sheet of paper you labeled "Gifts." Check off or highlight all items you record.

4. Examine your savings and investment account statements. You may find that you wrote a check on your money-market account last summer to pay for that Caribbean cruise that you took. Check off or highlight all items you record.

Here's the master worksheet, followed by advice keyed to each item on it. For each type of expense, I tell you:

What types of expenditures you should include under this heading, unless it's self-explanatory

Where you're most likely to find records of such expenses, other than in your check registers or on your credit card statements

Which chapter of my book covers how to cut your spending on each item, assuming a whole chapter full of advice is necessary

Where Your Money Goes Annually

Expenditure Current Amount Future Amount

1. Cable TV

2. Cash

3. Charitable gifts

4. Child care

5.Clothing

6. Commuting

7. Disability insurance

?8. Entertainment

?9. Finance charges

10. Gifts

11. Groceries

12. Grooming

13. Health insurance

14. Homeowners' or tenants' insurance

15. Household expenses

16. Housing

17. Life insurance

18. Media

19. Medical expenses

20. Miscellaneous

21. Pets

22. Restaurants

23. Savings

24. Taxes

25. Telephone

26. Tuition

27. Utilities

28. Vacations

29. Vices

30. Wheels


1. Cable TV. Paying to bring the Rugrats into your home may be worthwhile if it keeps you from taking your whole clan to the movies once a week. There are plenty of other ways to save money on entertainment, however. I cover them in Chapter 12.

2. Cash. Thumb through your check registers and note every greenback you withdrew from ATMs. Chances are you can cut back your cash outlays on just about everything. You'll find lots of tips in Chapters 6, 8, 11, 12, and 13.

3. Charitable gifts. Check Schedule A of your 1040 federal income tax return if you itemize deductions. If you don't itemize, examine your check registers. If living on less than two incomes means you'll have to cut your cash gifts, give more of your time to w...

Edition details

• Publisher: Broadway
• Publication date: 2001
• Language: English
• ISBN 10: 0767905652
• ISBN 13: 9780767905657
• Binding: Paperback
• Edition number: 1
• Number of pages: 352