When we are happily living as a couple, we rarely want to think about what life would be like without the other person. This is why we often avoid writing wills, sorting out inheritance or planning funeral costs. These tasks definitely aren’t fun even though they are important.
But what if we lived our lives differently?
Could you live off 50% of your income?
Our suggestion may seem a little extreme, but some couples use this approach. It might not be an absolute 50%; many choose to live off one salary and bank the rest. This method of re-organising spending and saving would be a significant change for many. It isn’t a solution to avoiding writing wills or planning funeral costs, but it does allow two things; you could live on just one salary, and you will have a reasonable amount of savings should the worst ever occur.
The benefits of a 50% lifestyle
A 50% lifestyle has become popular with those who have the financial flexibility to embark on it because of the future benefits. When you start to save a higher percentage of your income, you reach financial independence faster. This means you pay your home off quicker and you can begin to look towards retirement. Another benefit is, should the worst happen and you lose your partner, you are in a strong financial position to deal with the challenges ahead.
The loss of a partner is always incredibly hard, but not being thrown into debt because of funeral costs and maintaining an expensive lifestyle makes it less painful.
Evaluating your lifestyle
It is unlikely you’ll wake up one morning and start saving half your income, however, depending on your career you might be able to start saving bonuses and any salary increases you earn throughout the year. These are quick ways to save large percentages of your income.
If you have children, their changing education fees or childcare costs may be a way of saving more. We generally increase our spending proportionally to our income. One trick is to start saving any additional income before we become accustomed to spending it.
The impact of evaluating your current lifestyle is one of the main reasons we find the ‘power of half’ idea so powerful. The simple act of running through current expenses and evaluating if they are ‘necessary’ or ‘nice to have’ regularly identifies quick ways to save more. Over five years simply reducing one on-demand subscription and an un-used gym membership would save you over €3,000. These small cumulative gains start to make significant changes towards how quickly you can become financially independent.
Power of half stories
The book ‘The Power of Half’ by Kevin Salwen and his teenage daughter Hannah, talks about one family’s decision to cut their spending and start giving back to the community. Again, not everyone is in a position to do this, but it does highlight that those with high incomes can make changes that allow for a comfortable lifestyle and saving (or donating in this case).
There are also many anecdotal tales about the benefits of this approach; the family who realised that retraining as a doctor was possible after living only on one income, and the widow who was able to manage the loss of her husband due to her financial independence at a young age.
How to start
The biggest step is agreeing on the decision within your family unit. The whole task feels much easier when tackled together and there might be some surprising suggestion from family members about the things they would be willing to change. This is an excellent way of starting to talk about money within your family which is another benefit of the approach.
A list is always a great place to start. Try to separate your spending into essentials, nice to have and splurge/luxury. Having a few bank statements to hand helps to get the list started and means you don’t forget expenses that go out each month via direct debit.
As we highlighted at the start, this isn’t an approach that is suited to all. But the power of talking about money and how you feel you should spend it is always a valuable exercise.
