Planning for the future

My wife and I have been married for three years now and we've both decided that we're ready (mentally not financially) to start a family. My wife will not return to work after having children as she's always wanted to be a full-time mum and I fully support her decision. Our main concern is that we will lose her salary and we have no substantial savings to fall back on. We've become quite accustomed to living on a fairly decent joint salary and while we know we can't maintain the lifestyle we've been used to, I'm concerned that in the future, I alone will have to feed more than two mouths. Can you suggest any lifestyle changes, or clever budgeting ideas that may help? Matt, 38

Hi Matt, congratulations on your forward thinking. It's really quite unusual to see someone planning for such a life-changing event as having a baby. So, you're way ahead from the start. It's worth bearing in mind that, plan as you might, there's no guarantee that your wife will want to be a stay-athome mum just because it feels right now. But it's great to plan to have that choice rather than feel forced back to work. I think it's far more exciting to think about ways of making money rather than ways to make do with less. It brings out our creative side. Let's think about that first off:

1. Assess your worth. Your most valuable asset, in terms of cash flow, is your “earning ability.” You could lose everything you own – your house, your car – but as long as you still had your earning ability, you could make it all back and more. Take stock of your unique talents and abilities. Your job is to identify your special areas of uniqueness and then to commit yourself to becoming an expert in those areas.

2. Money-making opportunities are everywhere. Now is the time to get thinking about turning some of you and your wife's combined wisdom and “earning ability” into a money-making idea, in addition to your salaried jobs. This can be a joint project that you research and begin now in your spare time that can be managed and monitored without too much hands-on involvement, that gives you both the flexibility to do as little or as much as you want, and that generates extra income. This could be anything from a cleaning company, dog-walking agency, book-keeping service... whatever you can set up easily, imaginatively and can be run from home and in the evenings.

3. Plan for two pay rises! Now that you're aware of your stock and its value, figure out how you can offer additional benefits to your company in order to get not one, but two promotions and pay rises in as short a time as possible. Think about adding to their bottom line so that your increase is entirely justified. This is the time to get ambitious and move up that ladder two rungs at a time.

4. Where does your money go? Calculate EXACTLY what your monthly expenditure is. List EVERYTHING. Overestimate if you are not sure. Knowing what you spend and how you spend per month is one of the most useful pieces of information you can have. Decide where you can cut costs painlessly, leaving less of a shortfall for you to make up without your wife's salary.

5. Curb your consumerism. The culture of earning more to spend more just doesn't add up. And buying more stuff to store, tidy and take care of adds to the chores. A simpler, pared-down life is much more refined and desirable. Think before you buy. Do you really need it or really want it or are you being persuaded that you do? Watch your motivation. Buy less and buy better. A connoisseur doesn't surround himself with masses of cheap tat from thirdworld sweatshops, but carefully chosen objects that he cherishes and passes on to the next generation.