Saturday, March 6, 2010

Two income economy

I went for a bike ride with a friend today and in the course of conversation, he mentioned that it was getting harder to support a family on a single income. More and more the economy is becoming a two income economy.

I don't know for sure what that means. I suppose it means that it takes two incomes to support a family these days. But does it? Is the economy so tight that it requires two jobs to survive or is it that our culture entices us to buy so much stuff that we need two incomes to afford it?

On a certain level I find it hard to believe that we need to have two incomes so survive. What do people do that requires that much money? I make ~$30,000/year and my wife doesn't work outside of the home. While we aren't putting as much in savings as I would like, we have enough to support our family of 6.

On a similar note, we have someone at work who is coming in to do financial management seminars for interested individuals. I find it interesting that we find people who make tons of money (I'm talking about you Suze) to tell us how to set a budget. People who make six figure incomes generally have a different understanding of budgeting than those who have to decide between fresh vegetables and putting gas in the car.

While there is certainly nothing wrong with making money or even making a lot of money, I think that we can all work to better understand the true needs in life versus the wants.


Nate said...

Amen! Well stated, and to the point. For folks with jobs, most financial problems are spending problems, not earning problems.

Phil said...

You are also in one of the most affordable housing markets in the country. In many cities you literally do need two incomes if you can even hope to own a house (or one really big one!).

But it is definitely about spending more then living... like it's impossible for you to own two new cars, a house, go on vacation once a year, etc... on $30k no matter where you are. But of course no one needs new cars, and without two people working you probably don't need two cars etc....

2whls3spds said...

The two income scenario is a vicious circle. Yes it is possible to live on one income, but at the lower end of the scale huge compromises will have to be made, with housing being a major one.

It all about choices and what people are willing to live with. I have people look at me in horror when they find out I don't have cable and seldom watch television. But that is ~$50-$100 a month that I have to save or spend on something else.


Heffalump said...

I think that people get used to a certain level of living and then they think they can't survive without the things they are used to.
We were always poor growing up (poor to me meaning that we had to sometimes eat Ramen every day for several days and our clothes and shoes were holey) but we always had some kind of food, and shelter, and parents that loved us. I think living on that one income was a good thing. It helped me be prepared to know how to make it on just D's income for our family. We are quite blessed really and have no debt outside of our house. There are many people who don't see how we can possibly make it, and are shocked to find out that a family of 8 can live on $300 a month for groceries (because we raised our budget from $200 after we got out of debt). It just takes planning, and a bit of sacrifice. I'm just happy my kids only eat Ramen when they want to.