Page 563 - Introduction to Business

CHAPTER 15 Personal Financial Planning 537

losing a job may result from being laid off or your firm going out of business. Vol-
untarily quitting a job may result from a conscious decision, such as a couple decid-
ing that one of the two should stay home full-time to care for children.
Can two live as cheaply as one? No, but most families that want to live on one
wage earner’s income can probably do so. Many people erroneously believe that
two incomes are essential to afford the basic needs of a modern family. The fact is
that the financial benefits of a second income are often exaggerated. The disadvan-
tages of a two-income family are numerous: day-care costs, hectic schedules, fast-
food diets, restaurant meals, and paid housekeepers. If you would like to consider
living on one income, then you may benefit from the following strategies:
First, identify the items on which you spend your money. Make a record of all
your purchases for a month or two. Most people are amazed at how the little things
add up. If you have an up-to-date cash flow budget, then you can skip this step.
Second, identify all the expenses associated with the second job, such as child
care, commuting, work clothes, business lunches, and so on. Deduct these
expenses from the second job’s income. In addition, remember to deduct taxes and
other withholdings. How much is left? That’s the amount by which you have to cut
your expenses in order to live on one income. There are several areas in which you
may be able to save money.
You can help minimize your automobile expenses by keeping your car well
maintained. A car that is properly cared for should last at least ten years. When you
have to replace your vehicle, consider buying a used car. Shop very carefully. Search
the classified ads. Car dealers typically have a substantial markup above what indi-
vidual sellers would charge for a similar car. Prior to purchase, be sure to have the
car inspected by a dependable mechanic.
Is it possible for you to cut your clothing costs? The average family of four
spends over $2500 annually on clothes. The key to cutting this amount is to use
what you have. Most people have closets full of clothes, but they are unable to resist
buying unnecessary additional items. When new clothes are needed, begin your
shopping at discount stores and wait for sales at other stores.

Mother and sons work together to
minimize back-to-school shopping
expenses.

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