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The Secret to My Financial Success

I’m going to tell you the secret to my success today. My entire financial situation is tied back to a single decision coupled with many of the tips and tricks discussed on this site. This decision combined with good planning and investments has ultimately given us our current life. It truly is the secret to my financial success.

Some History

About 10 years ago I was single, and living in an apartment working a decently paying job. I was moving through life contributing 10% to my retirement a year, and building a healthy career. While I definitely wasn’t frugal, I also wasn’t digging myself deeply into debt by overspending. I was just like your average person on a path to retiring at 65. Then I met my wife who was on a similar path and everything changed.

The Secret to My Financial Success, in One Decision

My wife lived much the same life that I did. She lived a lifestyle of saving 10%, and was steadily moving towards retiring at 65. So when we decided to get married the question became, did two incomes still equal 10% or something else? The reality is much of an individual’s spending comes from housing, automobiles, heat, and insurance. I’d estimate these values combined equal over 60% of our expenses. Combining two incomes should always result in a significant reduction in costs compared to income if both people keep working. In fact it should at worst equal 120% (60% fixed plus 2x the 30% in variable expenditures we both had with the remaining 10% in savings for each). This would leave 80% of one person’s income for savings. Knowing this coming in, we decided to implement the secret to my financial success, we decided to live off the total value of the lower of our two incomes. Essentially our expenses became one person’s original income. To facilitate the remaining 20% reduction, my wife experienced a 10% pay raise around the time of our marriage. We further cut variable expenses by about 10% because my wife replaced my habit of eating out with more home cooked meals. This brought us to the point so that we were essentially living off 100% of my wife’s income.

Consistency in Following that Decision

We followed this decision religiously over the last 10 years. When it came to buying a house we purchased one that could be paid for on my wife’s income alone. For automobiles, we stuck with the cars we had, and combined insurance policies to drop costs. For heat, we chose a house that was only slightly larger than what we had originally, and only increased it once we needed the space for kids. This kept heat and air-conditioning costs in check. For daycare we picked options that would fit in with any pay raises in my wife’s income. Using these steps we were able to maintain the status quo of living off her income and saving mine.

Now to be honest, a big part of this decision was inspired by the fear of the 2008 recession. We had a real fear of loss of employment due to the down turn. It seemed only logical to live off one income because the likelihood of simultaneous job loss was minimal. Thankfully this fear never materialized, but even if it had we would have been prepared. Ultimately living off one income and saving the other ended up being the best decision we ever made. The result, for 8 years we’ve always lived off my wife’s salary. Sure, my wife still contributed to her 401k due to the flexibility of allocation across accounts. However, the amount of my income was banked into our retirement and savings accounts.

The Ramifications of our Decision

As my life progressed, my income has increased dramatically. My wife’s income has also increased, though it remained lower than mine as she is earlier in her career than me. Recently much of her increase was eaten up by daycare expenses, but before that any increased expenditures were accounted for in her pay increases. Meanwhile, with my income increases we simply did not increase spending. My increases in income were pushed into increased contributions to 401k, Roth, and other accounts. Before we ever had a chance to spend it, we made the money disappear into savings. Our savings rate increased even further as the years passed. This ultimately led to us reaching our current Financial Success.

Which brings us to my wife’s decision to be a stay at home mom. As noted previously mine was the higher income by about double. So, effectively we could convert to a one family income and still save 50% of our income a year. That single decision, to live off one income, ultimately gave us options and flexibility enabling us to make this decision later in life. It also ultimately led to our current net worth. Simply put that single decision has been the secret to my financial success.

For those married folks in the audience, how did you handle setting a budget when you got married?

27 Comments

  1. Smart Provisions
    Smart Provisions February 6, 2017

    It’s great that you guys stuck to your lifestyle and didn’t have any lifestyle creep during your journey.

    Thanks for sharing your journey, FTF!

  2. The Green Swan
    The Green Swan February 6, 2017

    Very powerful lesson there, living off one salary! I first heard of that concept from my parents . My dad mentioned at some point in my youth that’s what they did and it stick with me. We have basically tried doing the same thing over the course of our 8 years of marriage. It certainly helps the peace of mind during recessions like you mentioned and can be a boon to the early retirement cause!

    • fulltimefinance@fulltimefinance.com
      [email protected] February 6, 2017

      It was a much more common scenario in generations past, even once woman became common place in the workforce. It seems to be much more unique in today’s day. Thanks for stopping by.

  3. Chris @ Mindful Explorer
    Chris @ Mindful Explorer February 6, 2017

    It is often the amazingly simple math that people miss. Take the couple situation as a chance to accelerate your savings not double your spending.

    • fulltimefinance@fulltimefinance.com
      [email protected] February 6, 2017

      As you step back and look at the math it is obvious there is a great opportunity there to either massively inflate your life style or savings. The choice is the individuals.

  4. Max Your Freedom
    Max Your Freedom February 6, 2017

    That’s great advise! We basically did the same thing early on in our marriage, although it was difficult to live off one salary at first since we weren’t making that much, and we had lots of student loan debt. We’re now at a point where we can cover all our monthly expenses using 1 out of 4 of our combined paychecks each month, while saving/investing the rest. Setting our budget was rough going at first, since we had different financial habits. Eventually we figured it out.

    • fulltimefinance@fulltimefinance.com
      [email protected] February 6, 2017

      It certainly gets easier with time. It sounds like you were able to leverage it into a high saving rate. Thanks for sharing.

  5. Mustard Seed Money
    Mustard Seed Money February 6, 2017

    When my wife and I first got married she wasn’t working. Her mother had recently passed away and she was her special needs sister’s full time caretaker. So we didn’t have much of a choice except for living off one income 🙂

    So there wasn’t much of a decision to make for us.

    • fulltimefinance@fulltimefinance.com
      [email protected] February 7, 2017

      Sometimes life makes the decision for us. I hope everything worked out with her sister.

  6. Andrew
    Andrew February 7, 2017

    That’s a very interesting point. I never thought about the gains you could get from financial leverage in a marriage. To be honest (and somewhat cynical) I’ve always thought more about the downside in a divorce after seeing a few older friends go through it.

    • fulltimefinance@fulltimefinance.com
      [email protected] February 7, 2017

      Divorce is certainly a risk of marriage. Like anything else though if you find the right person you can either take the risk and see where it goes or just accept failure from go. There are of course ways to mitigate that risk.

  7. Mr Defined Sight
    Mr Defined Sight February 7, 2017

    My wife and I both have similar saving and spending ideals so we are able to get along well with the finances. In fact once we were married, the savings increased as we both put our heads together on ways that we could do better. Nice post!

    • fulltimefinance@fulltimefinance.com
      [email protected] February 7, 2017

      That’s definitely a great suggestion. Two people means 2 possibilities for maximizing income. Do you have any examples where you have leveraged this?

  8. Jim @ Route To Retire
    Jim @ Route To Retire February 7, 2017

    Definitely the way to do it! We’ve always lived very modestly, but once we had a daughter, my wife went to part-time at a non-profit (not making very much). That cut out a lot of the excess saving, but we’re still saving about 30-35% of our total income.

    The weird thing for us is that we’ve never set a budget. We’re just natural savers and conscientious buyers. For whatever reason, that seems to work well for us.

    Cheers!

    — Jim

    • fulltimefinance@fulltimefinance.com
      [email protected] February 7, 2017

      There is more then one way to get ahead. We don’t do an explicit budget either. We more have guidelines for overall spending based on the past. Thanks for commenting.

  9. SMM
    SMM February 7, 2017

    Are you and your wife both savers? It appears so, and that helps A LOT. if there is a saver and a spender, it’s usually like a tug of war, but having the same mentality reduces the urge from one another. My wife is more of a spender and I’m a saver, but we are trying to reach a middle ground, which is a great journey in and of itself.

    Congrats on all the success to you and your family!

    • fulltimefinance@fulltimefinance.com
      [email protected] February 7, 2017

      It certainly does help that we are on the same page, we are both savers. She likes to tell a story that until she was 18 she thought putting money into a savings account resulted in a lollipop. While she is a saver, you can probably tell from that story I am the investor.

  10. Making Your Money Matter
    Making Your Money Matter February 7, 2017

    I’ve been looking at the dual income earner scenarios from a little bit different perspective lately I’ve decided whether to go from being a stay-at-home mom back to work full-time in the near future. The reality of it is, we would have to have a specific financial goal in mind for what we would do with my “extra” income for it to be worth it, because after we factored in my income being taxed at our highest marginal rate, FICA taxes, gas, after-school care, business clothes, etc I’d likely only really have the use of around half my gross income.
    You guys clearly have this all figured out with your awesome savings rate and being able to be on the same page with this all!

  11. Leo T. Ly @ isaved5k.com
    Leo T. Ly @ isaved5k.com February 7, 2017

    I was living with my future wife for about a year before we got married as we purchased a home together. I would pay the mortgage and my wife would pay the rest of the bills. We still have the same arrangements today. If it’s not broken, why fix it right?

  12. Mad Money Monster
    Mad Money Monster February 7, 2017

    This sounds like our story. I was single for a very long time and did not do everything possible to secure my financial future. I thought I would be young forever. I’m still relatively young, but I also could be sitting here retired already had I focused on building real wealth 10 years ago. I met my husband a few years ago and since I had gotten good at living on my single income – we decided to just bank his. If we stay the course, we should hit financial freedom within a few years. Score!

  13. The Money Wizard
    The Money Wizard February 8, 2017

    Great post.

    It’s wild to me that living off one salary is such a foreign concept today. Is life really so much more expensive that a family “needs” two incomes, or are people just inflating their lifestyles to justify maxing out both incomes? I suspect the latter.

    • fulltimefinance@fulltimefinance.com
      [email protected] February 8, 2017

      Very good question. When you consider all the things that are now considered minimum standard of living compared to a few decades ago you really have to wonder. When was the last person you met who didn’t have a television to due to lack of money?

  14. Royal Blue
    Royal Blue February 9, 2017

    FTF, my wife and I did exactly the same thing! Pretty much right away we decided to live off of one salary only and bank the other one. We never took out a mortgage we couldn’t qualify for on just one of our salaries. Initially we did it just to reduce risk in case of job loss or some other adverse event, but pretty soon the savings started to add up and we ended up being able to retire early.

    • fulltimefinance@fulltimefinance.com
      [email protected] February 10, 2017

      Looking back it was one of our best decisions. As The Money Wizard pointed out it is weird it’s not more of a normal thing. It’s so simple and yet it has a profound impact down the road.

  15. Michael Antony
    Michael Antony February 22, 2017

    Thanks for this fantastic article. Anyone can easily understand their financial moves and importance of savings and unnecessary money spending by reading this article. I came to know lots of new things. It’s totally worth able to share with my friends.

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