You will be able to list the money changes when a household drops to one income.
Back in lesson 1.4, Hui Min and Daniel found one clash on their snapshots. She would like a child within two years, and he would like to leave his sales job within two years to start a business. Both plans have the same thing in common: for a while, the household could be living on one income. They are far from the only couple in that position. A baby, a parent who needs full-time care, a retrenchment, an illness, a career break to study, or a spouse's posting overseas can all turn two incomes into one, sometimes with months of notice and sometimes overnight.
Most couples think of this change as "we will have less money". That is true, and it is only the first of several changes. This lesson goes through all of them, so you can see the whole picture before it happens to you.
The obvious change is take-home pay. If Hui Min stopped work, using the example figures from module 3, the household's take-home would fall from S$10,000 a month to Daniel's S$6,000. If Daniel stopped, it would fall to Hui Min's S$4,000. The shared costs of S$3,000 do not shrink to match, and a new baby adds costs of its own.
Less visible is what stops alongside the salary. The partner who stops working also stops receiving CPF contributions, from the employer and from their own pay. Their Ordinary, Special and MediSave accounts stop growing except through interest. And much of the insurance people rely on comes through their job. Group hospitalisation cover, group term life and group disability cover often end when employment ends, or shortly after. If a partner's only life cover was through work, it disappears on their last day.
Benefits go too: medical and dental claims, any staff discounts, and sometimes cover for the family on the employer's plan. If the earning partner's employer plan covered the spouse, check what happens if that employer changes.
With two incomes, a household has a kind of built-in backup. If one partner is retrenched, the other's salary keeps the basics paid while they look for work. With one income, that backup is gone.
The whole household now depends on a single person staying healthy, staying employed and staying alive. A retrenchment, a long illness or an accident affecting the earner hits every member of the family at once: the mortgage, the children, the non-earning partner, even the parents' allowances. That is why the next lesson, 4.2, Protect the partner who earns, is about the earning partner's cover rather than the household's.
The earning partner often feels this pressure without saying so. It is worth naming it between you, because it changes how each of you thinks about job risk, overtime and taking leave.
The quietest change has the longest effect. As lesson 3.3 explained, when CPF contributions stop, that partner's retirement savings stall. If they also stop putting money into their own savings or investments, their personal net worth stands still while the other partner's keeps growing.
That gap might not matter while the couple is together and treats everything as shared. It matters a lot if the earning partner dies, if the marriage ends, or simply when both reach retirement and each draws CPF payouts based on their own balance. Lesson 4.3, Keep the non-earning partner's own savings growing, is about closing that gap.
The best time to plan for one income is while you still have two. If a child is planned, start a year or more before the due date. You can practise living on one salary and saving the other, which tests the budget and builds a buffer at the same time. Check now what insurance each of you has through work and what you hold personally, before anyone hands in a resignation letter. Look at whether the flat's monthly instalment, paid partly from both partners' CPF, still works if one partner's CPF contributions stop, and how the shortfall would be paid.
For a sudden drop, such as a retrenchment or illness, the planning is the same, with less time. An emergency fund sized for one income, which lesson 4.4 helps you work out, gives you that time.
Hui Min and Daniel decide not to wait for either plan to become real. They will look at what would change for each of them, one at a time.
Do the same for yourselves. Take one of you at a time and picture them stopping work next month. Go through what happens to the cash, to CPF and to insurance, line by line, until you have the full list.
List every change, in cash, CPF and insurance, if one of you stopped working next month.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).