Cover image for How to raise a family on less than two incomes : the complete guide to managing your money better so you can spend more time with your kids
How to raise a family on less than two incomes : the complete guide to managing your money better so you can spend more time with your kids
Topolnicki, Denise.
Personal Author:
First edition.
Publication Information:
New York : Broadway Books, [2001]

Physical Description:
xx, 331 pages ; 21 cm
General Note:
Includes index.
Format :


Call Number
Material Type
Home Location
Item Holds
HG179 .T59 2001 Adult Non-Fiction Non-Fiction Area
HG179 .T59 2001 Adult Non-Fiction Open Shelf
HG179 .T59 2001 Adult Non-Fiction Open Shelf

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Many parents today believe that two steady incomes are not only desirable but absolutely necessary in order to raise a family. Yet most full-time working mothers say that if it weren't for the money, they would not work, and instead would stay at home with their children. After the birth of her second child, Denise Topolnicki faced this common dilemma: Continue working full-time, or spend more time with her family? As a former editor of Money, Denise used her financial expertise and discovered that she could work only part-time and be at home for her children--while not breaking her family's budget. By combining her investment know-how with compassionate advice, Denise gives parents a clear-cut strategy for controlling their money--from saving on food, to creating a cash reserve, to learning how to retire on less than two incomes. Packed with worksheets, detailed plans, and inspiring case studies, Topolnicki's plan helps families set fun priorities while still balancing the checkbook. Whether you want to leave work altogether or continue part-time, this book is the key to freedom for millions of families trapped on the working-parent treadmill.

Reviews 1

Publisher's Weekly Review

After having her second child, Topolnicki, a former writer and editor for Money magazine, wanted to build a freelance writing career and spend more time with her children, though her financial savvy led her to wonder whether having only one full-time salary would dramatically alter her family's lifestyle. After taking a long, hard look at her expenses, savings and child-care bills, she quickly realized that making her own work hours and eliminating a lengthy commute would not mean that she'd have to penny-pinch. There were some cutbacksÄmore activities closer to home, fewer high-priced lattesÄbut Topolnicki has compiled her best strategies and advice to convince readers that most people would benefit from having one parent stay at home. In addition to detailing her own experience, Topolnicki offers insights from her interviews with other parents and includes their tips as well. She covers the basics of money managementÄbudgeting, mortgages, retirement funds, insuranceÄin intelligible detail. Though solid, her conversational, friendly style is almost too simplistic. This book will best serve people who are intimidated by money matters and who haven't read other personal finance primers. There's lots of useful information here, along with some "thrifty" advice on price clubs, groceries and play groups that seems awfully familiar. (Feb.) (c) Copyright PWxyz, LLC. All rights reserved



Part One CHAPTER 1 Get a Grip on Your Spending If you don't know how much money you spend or what you spend it on, you're not ready to hop off the two-income treadmill. You've got to know where your money goes if you want to start living on less without drowning in debt. Sure, tracking expenditures is tedious, but I guarantee it'll pay off big. When I got a handle on my spending, I realized that my husband and I were together blowing about $45 a day in cash! That's more than it would cost us to eat out every night. What were we spending that money on? The list was long, so I'll name just three little indulgences that'll be familiar to many two-income couples. My lunches, because I was too busy every evening to even think about brown bagging it the next day. Taxi fares, so my husband and I could work past 5 p.m. and still rush home before we had to start paying our nanny overtime. Saturday lunches out, because we often spent the entire day doing errands that we didn't have time for during the work week. The parents I surveyed spent lots of money on other types of goods and services when they tried to live the two-income lifestyle. Do any of their stories ring a bell for you? Nancy Krzywicki, an ex-magazine editor who now freelances part time so she can spend more time with her five-year-old daughter, recalls dropping about $40 a month on dry cleaning when she worked in Manhattan. She used to spend $150 getting her hair cut and colored every five weeks. Now she waits at least eight weeks between salon visits, and saves about $500 a year. "I've also given up manicures," she says. "I never liked them but felt I had to have my nails done when I worked in a full-time office job." Before they had their first child two years ago, April and Ben Orseck were so busy working that they ate out four times a week. Now that April stays home with their two children, the Orsecks go out to dinner only once a month. April even packs a brown bag lunch for Ben daily. Yvonne Lowry quit teaching after the third of her four children was born. She and her husband Tom, a packaging designer, dipped into their savings to pay off their car loan. They also let their cleaning woman go and, of course, stopped sending their kids to day care. With hardly any effort, they slashed their expenses by $1,300 a month. When Amanda and Neil Pinder both worked for her father's computer consulting company and had one son, careful shopping wasn't a priority. Then came triplets, and suddenly the Pinders had four kids under age two. Says Amanda, who's now a stay-at-home mom: "When I worked and had just one son, he had an outfit for every occasion. Now all four kids have a fairly sparse wardrobe." Amanda also used to spend more on each item, like the $90 winter coat she had to return because its zipper jammed. "Now I wouldn't pay more than $30 for a kid's coat," she says. What will you find out by using the worksheet in this chapter to track your spending? You'll discover the following five crucial bits of information: 1. You'll learn how much money you'll save if you quit your job and simply cut out work-related expenses. Just think?you'll be able to kiss child care and commuting costs good-bye. 2. You'll see how much you spend on discretionary items, and you can plan to trim those expenditures through sheer willpower. If you eat out two or three times a week, for example, you can vow to reacquaint yourself with your kitchen. You might also cut back on the number of lattes you buy each week. 3. You'll see how much you spend on necessities like groceries, insurance, and health care. Having a handy record of these expenditures will help you figure out which ones you can cut?and by how much. 4. You'll find out what you do with (almost) all of the cash you pull out of automatic teller machines. 5. You'll know how much?if anything?you're saving now. That will be useful to know when you read about how to keep?or start?saving after you give up all or part of your second income. You can use the worksheet on pages 9 and 10 to record your expenditures. Pencil in how much you now spend on thirty items from cable TV to wheels under the column labeled "Current Amount." After you've finished this book, fill in the column labeled "Future Amount" to reflect spending cuts you plan to make. I really want you to fill out this worksheet completely. So, I've included simple, line-by-line instructions. I don't ask for any numbers without telling you where to find them. And I swear that the whole exercise should take no more than a couple of hours. (You'll spend even less time on this project if you already track expenditures on a computer program.) A couple of hours may seem like a lot of time, but it isn't really when you consider that you're creating a road map to a saner and more satisfying family life. If you're already using computer software like Quicken to record your monthly expenses, pull up your documents for the past twelve months. Add up how much you spend on different items, like child care, groceries, and utilities. Check your list against my worksheet to make sure you haven't missed anything. If you have, figure out how much you spend on those items by using the methods I suggest in this chapter. Then go on to Chapter 2. If you don't know where your money goes, get ready to find out. First things first. Pick a time to do this project when you can really concentrate on it. If you already have kids, don't try to fill out this worksheet until after you've tucked them in for the night. Next, get settled. Gather the following documents and supplies, and brew a cup of coffee or tea to sip while you work: * A lined writing tablet. * Two sharp pencils with clean erasers. * Your checkbook registers for the past twelve months. * Your credit card (American Express, MasterCard, Visa, department stores, etc.) statements for the past twelve months or annual summaries of charges. * Statements for your brokerage, money-market, and savings accounts. * Statements for your other investment accounts, if any. * Your pay stubs and your spouse's. * Your monthly mortgage statements or payment coupon books. * Monthly statements or payment coupon books for your home equity, personal, or student loans. * The last federal, state, and local income tax returns you filed. * A calculator. Spread everything out on a desk or table. Now take the following four steps: 1. Copy the thirty categories listed on the master worksheet on pages 9 and 10 onto separate sheets of paper from your writing tablet. For example, label your first sheet of paper "Cable TV," the next sheet "Cash," and so on. You'll use the sheets to record how much you spent on each of the thirty items over the last twelve months. After you've recorded all of your expenditures, add up the amounts on each sheet to get a grand total. Then jot those numbers down on the master worksheet. 2. Flip through your check registers and record all payments that belong under one of the thirty headings on your thirty sheets of paper. Every time you write down an amount, make a mark next to that entry in your check register. Alternatively, highlight the entry with a yellow marker. That way you won't count any payments more than once. 3. Comb through your credit card statements. Put all of your charges under one of the thirty headings on your thirty sheets of paper. For example, if your Visa statement from last January includes charges from Sears and Toys 'R Us, you can probably assume they represent holiday gifts. So enter them on the sheet of paper you labeled "Gifts." Check off or highlight all items you record. 4. Examine your savings and investment account statements. You may find that you wrote a check on your money-market account last summer to pay for that Caribbean cruise that you took. Check off or highlight all items you record. Here's the master worksheet, followed by advice keyed to each item on it. For each type of expense, I tell you: What types of expenditures you should include under this heading, unless it's self-explanatory Where you're most likely to find records of such expenses, other than in your check registers or on your credit card statements Which chapter of my book covers how to cut your spending on each item, assuming a whole chapter full of advice is necessary Where Your Money Goes Annually Expenditure Current Amount Future Amount 1. Cable TV 2. Cash 3. Charitable gifts 4. Child care 5.Clothing 6. Commuting 7. Disability insurance ?8. Entertainment ?9. Finance charges 10. Gifts 11. Groceries 12. Grooming 13. Health insurance 14. Homeowners' or tenants' insurance 15. Household expenses 16. Housing 17. Life insurance 18. Media 19. Medical expenses 20. Miscellaneous 21. Pets 22. Restaurants 23. Savings 24. Taxes 25. Telephone 26. Tuition 27. Utilities 28. Vacations 29. Vices 30. Wheels 1. Cable TV. Paying to bring the Rugrats into your home may be worthwhile if it keeps you from taking your whole clan to the movies once a week. There are plenty of other ways to save money on entertainment, however. I cover them in Chapter 12. 2. Cash. Thumb through your check registers and note every greenback you withdrew from ATMs. Chances are you can cut back your cash outlays on just about everything. You'll find lots of tips in Chapters 6, 8, 11, 12, and 13. 3. Charitable gifts. Check Schedule A of your 1040 federal income tax return if you itemize deductions. If you don't itemize, examine your check registers. If living on less than two incomes means you'll have to cut your cash gifts, give more of your time to worthy causes. Time is something you'll have more of. 4. Child care. You won't have to pay for day care anymore if you stay home, but you'll still need baby-sitters. Then there's preschool and summer camp. If you're a good citizen when it comes to paying caregivers, examine your check registers to figure out how much you spend. If you pay your sitter in?shh!?cash, multiply her weekly salary by the number of weeks per year she works. Add any special payments, like her Christmas bonus. Subtract the total from your cash expenditures (line 2 on this worksheet). Chapter 6 covers how to spend less on all types of child care. 5. Clothing. Count the cost of shoes, jewelry, and accessories, too. Don't go crazy trying to figure out if a $60 charge on your Macy's bill represents your son's sneakers or the toaster you bought to replace the one that died. Just record the amount under clothing (line 5) or household expenses (line 15), and move on. To find out how to spend less on just about everything, see Chapter 8. 6. Commuting. Tally up how much you spend on bus or train tickets, tolls, and parking fees. If you and your husband pay cash for these expenses, estimate your daily outlay, then multiply it by the number of days you commute each year. Subtract the total from cash (line 2). If you stop working or start working from home, you can erase your commuting costs. I saved more than $2,000 a year by cutting out my daily commute between New Jersey and Manhattan. 7. Disability insurance. This coverage kicks in if an accident or illness prevents you or your spouse from working. If either of you has group coverage at work, check your pay stubs to find out how much you pay for it. For individual policies, examine your check registers for premium payments. I cover cost cutting tips in Chapter 9. 8. Entertainment. Tote up how much you spend on tickets for concerts, movies, and sports events, health club dues, sports equipment, and toys. If you tend to pay cash for amusements, estimate your annual outlays. Let's say your family of three goes to the movies every two weeks. If tickets cost $8.00, multiply $24 (three tickets) by 26 (the number of times you go to the movies in a year) to get $624. If you typically spend $15 on refreshments every time you go, add $390 to $624 to get $1,014. Subtract that total from cash (line 2). Yes, you can have fun without spending a fortune; find out how in Chap-ter 12. 9. Finance charges. Check your credit card statements to see how much interest you pay on credit card balances. Also, examine statements from any home equity, personal, or student loans you carry. Don't include interest you pay on your mortgage or auto loans. For advice on cutting your interest costs, see Chapter 8. 10. Gifts. Check your credit card statements, although you may have to do some detective work. A $65 charge from Toys 'R Us, for instance, might include two bottles of bubble bath for your kids and $60 worth of birthday presents for their friends. Don't bother being precise unless your gut tells you that you're spending a small fortune on gifts. If that's true, thumb through your old calendars. It may jog your memory about what you bought your parents for their anniversary or your sister for her birthday. If you remember buying earrings for your sister's birthday, for example, check your credit card statements for a month or two after her birthday to figure out how much you spent. For suggestions on how to stop buying so much, see Chapter 8. 11. Groceries. Count the food and household supplies you buy at grocery, convenience, and gourmet stores. Examine your credit card statements if you ever charge groceries; flip through your check registers if you pay with checks or a debit card. If you usually pay cash, estimate your weekly bill and multiply it by 52. Subtract your annual total from cash (line 2). In Chapter 11, I tell you how to eat on the cheap. 12. Grooming. Tally your spending on haircuts, manicures, cosmetics, and dry cleaning. If you usually pay cash for these goods and services, estimate how much you spend annually and subtract it from cash (line 2). Then read Chapter 8. 13. Health insurance. If you've got group medical and dental insurance, check pay stubs to see how much you pay in premiums. If you buy coverage on your own, examine your check register. For cost-cutting advice, see Chapter 10. 14. Homeowners' or tenants' insurance. Check your mortgage statements if your lender sends a portion of your monthly payment to your insurer. If you buy homeowners' insurance directly, examine your check registers. The same holds true if you rent and buy tenants' insurance. For shopping tips, see Chapter 9. 15. Household expenses. Add up what you spent on your home over the past twelve months. Include big-ticket items like appliances and recurring expenses, like house cleaning. If you pay the teenager who mows your lawn in cash, estimate your annual outlay and subtract it from cash (line 2). Then see Chapter 8. 16. Housing. Examine your mortgage statements and check registers to figure out how much you spend to rent or own your home. Your mortgage lender may use a portion of your monthly payment to pay your real estate taxes, home-owners', and mortgage insurance. If so, record your annual tax bill on line 24 of this worksheet. Put your homeowners' insurance premium on line 14. To learn how to trim your housing costs or buy your first house, see Chapter 5. 17. Life insurance. Thumb through your check registers to find out how much you pay for your family's policies. If you or your spouse has group coverage at work, also check your pay stubs. Find out how to make insurance more affordable in Chapter 9. 18. Media. Tote up how much you spend on books, magazines, and newspapers. Don't forget all of the compact discs, computer software, and DVDs you buy. If your husband picks up a newspaper at the train station every morning, estimate the annual cost and subtract it from cash (line 2). Then check out Chapter 12. 19. Medical expenses. Add up how much you spend on visits to doctors, dentists, and other health care professionals. Count your outlays for drugs, contact lens supplies, and eyeglasses too. Don't forget that you get back some of the money you spend on medical care if you have health insurance. Look for checks from your health insurers on statements for your checking, savings, and investment accounts. Add up the reimbursements you received and subtract them from the amount you spent. Enter that number on line 19. I cover the high cost of keeping your family healthy in Chapter 10. 20. Miscellaneous. If you've got bills that don't quite fit under any other heading, put them here. A likely candidate: The fee you paid your accountant to complete your tax return. Most substantial miscellaneous expenses don't recur. If you paid a lawyer to draw up your will last year, for example, you won't have to do it again this year. One exception: union dues. If you or your husband pay them, check your pay stabs. 21. Pets. Tote up how much you spend on food and supplies, grooming, and visits to the vet. If you usually pay cash for Fifi's chow and coiffure, estimate your annual outlay and subtract it from cash (line 2). Or, if you buy pet food at the grocery store, subtract your annual outlay from your grocery bill (line 11). Assuming you love Fifi too much to even consider giving her away, there's not much you can do to cut the cost of owning a pet. Buy cheaper chow, or purchase it in bulk at a discount store. Let Fifi's fur go natural and dispense with trips to the beauty salon. 22. Restaurants. Count what you spend on takeout meals and lattes as well as at restaurants. (Don't include the money you spend on food while vacationing, however.) You probably charge meals at restaurants but pay cash for gourmet coffee and your kids' Happy Meals. Think about the food you and your family ate away from home during the past week. Estimate how much it cost, then project over a year to estimate your annual outlay. Subtract it from cash (line 2). Find some food for thought in Chapter 11. 23. Savings. Count any money that you socked away over the last twelve months and have yet to spend. Check the statements you got from your bank, broker, and mutual fund companies. Don't forget to check for withdrawals from your ac-counts to see how much you really saved. Have you purchased certificates of deposit or U.S. savings bonds over the past twelve months? Also, check your pay stubs to see how much you and your husband put into 401(k)s or other retirement savings plans. I tell you how to save for rainy days, retirement, and college in Chapters 13, 14, and 15. 24. Taxes. Check the last 1040 you filed to see how much you paid in federal income taxes. If you or your husband pays self-employment tax, look up how much you paid on your 1040. Examine Schedule A of your 1040 to find out how much you coughed up for state and local income taxes, real estate taxes, and personal property taxes. Check your pay stubs from the end of last year to see how much FICA tax you paid. (FICA pays for Social Security and Medicare.) If you don't itemize tax deductions, examine your mortgage statements or local tax bill to figure out how much real estate tax you pay. Look at your 1040A or 1040EZ to figure out how much federal income tax you pay. Dig out your state and local tax returns, and check your pay stubs for FICA payments. You'll be happy to read that Uncle Sam smiles upon families who live on less than two incomes. Read Chapter 4. 25. Telephone. Nowadays, gabbing can really add up to big bucks. Figure out how much you spend on local and long-distance calls, cellular service, pagers, and the Internet. Shop for a long-distance plan that fits your calling habits. Get rid of fancy features like call waiting and caller ID. And give up (or don't get) a cell phone. I know, I know. You carry a cell phone in case of dire emergency. However, admit it?you've used yours to call your mother from the mall about a spectacular sale, haven't you? 26. Tuition. Baby learns to crawl at Gymboree, while brother learns to count at preschool. Sister studies ballet, while Dad works toward a master's degree. Nowadays, we spend a small fortune improving our bodies and our minds. Fortunately, you can take tax deductions for some educational expenses. Read Chapter 4 for the details. I cover how to cut the cost of classes, camps, and college for kids in Chapters 6 and 15. And in Chapter 18, I explain how to get the training you need to get a good job when you're ready to return to work. 27. Utilities. You've got to pay for electricity, fuel oil or gas, and water. You may even have to pay someone to pick up your garbage and clean your septic tank. You already know you should turn the lights off when you leave a room. Your kids even do it, after you told them to about a million times. Being persnickety about lights is better than wasting energy, but it's not going to cut your bills to the bone. I thought I'd save a few bucks if I controlled the furnace and air conditioner in my house all day, instead of leaving it to a nanny. The most I ever saved was truly a few bucks?a whopping $39 a year. 28. Vacations. Figure out how much you spend on airfares, rental cars, hotels, and restaurants. You probably pay cash for admissions and incidentals, so add up the ATM withdrawals you made just before and during your vacations. Subtract the total from cash (line 2). For cost-cutting advice, see Chapter 12. 29. Vices. If you pay cash for cigarettes and liquor, estimate your weekly outlay and multiply by 52. Subtract your annual total from cash (line 2). Smoke a pack of cigarettes a day and you burn up at least $1,000 a year. That would pay for a nice vacation. Need I say more? 30. Wheels. Add up what you spend on loan or lease payments and auto insurance. Don't forget the cost of gaso-line, maintenance, repairs, licenses, and fees. If you usually pay cash for gas, estimate your annual cost and subtract it from cash (line 2). To learn how to stop wasting money on wheels, see Chapter 7. Once you've recorded all of your expenses, add up the entries on each of your thirty pages. Then pencil those numbers in on the worksheet. The result may depress you. You probably spend lots of money on things your family really needs, like food and health care. And you probably also spend plenty on things you could live without but don't want to, like your dog and summer camp for your kids. But believe me: you can cut virtually any expense if you really want to. Remember the Pinders, who've got four kids and one income? The first year that Amanda stayed home, they spent $12,000 more than Neil earned. Fortunately, they had savings to fall back on. Then, says Amanda, "we finally figured it out." They discovered they could cancel their mortgage insurance (to see if you can too, read Chapter 5). They gave up their cell phone and started shopping smarter for everything from clothes to groceries. The Pinders' four little exemptions also give them a big break on taxes. You'll probably also cut the tax collector's take by quitting or cutting back on work?even if you don't have four kids. Turn the page to find out how. Excerpted from How to Raise a Family on Less Than Two Incomes: The Complete Guide to Managing Your Money Better So You Can Spend More Time with Your Kids by Denise M. Topolnicki All rights reserved by the original copyright owners. Excerpts are provided for display purposes only and may not be reproduced, reprinted or distributed without the written permission of the publisher.