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ILLUSTRATIVE EXAMPLE

Could we live on one income for a year?

Test an income change against childcare, housing, cash, and retirement saving. The accounts, amounts, and answer below are fictional.

LSAMPLE ANSWERILLUSTRATIVE
THE SHORT ANSWER

Yes, but only if you cut optional spending and build another $12,000 in cash first. With those changes, the emergency fund covers the one-income gap and childcare for 11 months without using retirement savings.

KEY NUMBERS
Current cash$42,000
Extra cash needed$12,000
Coverage11 months
WHAT MATTERS
  • Childcare and housing are the two costs that make the one-income year tight.
  • Pausing retirement contributions helps less than trimming travel and delaying a car purchase.
  • The plan needs a separate reserve for health-insurance changes if the lost job provides benefits.
POSSIBLE NEXT STEPS
  • Save $1,000 a month for the next year in a dedicated income-gap fund.
  • Price health coverage and childcare before choosing which income to rely on.
  • Delay the planned car purchase until both incomes return.
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