Disclosure: This post may contain affiliate links, meaning if you decide to make a purchase via my links, I may earn a commission at no additional cost to you. See my disclosure for more info.
One of the greatest mysteries from times past is how so many families survived and thrived on just one income. Has the value of labor really been so diminished that a single earner cannot support a family of four anymore, or have our spending needs grown to include too many nonessentials previous generations did without? No matter your family’s financial situation, it is always wise to prepare for any potential curveballs life may throw your way. With some preparation and adjustments, you can navigate any financial situation, even one that means making ends meet with just a single income.
How to Live on One Income
My family has struggled through job loss, caring for a sick parent, and moving across the country with only one guaranteed job. The first time we lost an income, we had no plan. We had no idea of the actual costs involved. Out estimates and actual expenses were nowhere near the same. There will be an adjustment period if you go from being a two-income couple to a one-income couple. You don’t have to go to a minimalist life overnight, but you have to take stock of your situation and start planning as soon as possible. Here are the tips and strategies we used to live on a single income:
1. Do the math
Things will get more complicated, and family life will change. Money matters become even more critical. Prepare as much as possible by taking stock of your current situation and running the numbers. Here are some questions to ask:
-
- What will our monthly income be after taxes?
-
- How much money do we have in our bank accounts?
-
- What are our total monthly expenses?
-
- How much do we spend every month on just essential living expenses?
-
- How will we handle child care?
-
- Can we afford to live where we live?
-
- How will health insurance be handled?
-
- Do we have enough life insurance?
-
- How will we build our retirement savings?
-
- Will we need two cars?
-
- How much debt are we carrying?
-
- What are our monthly debt payments?
As you can see, it’s more than adding up your new household income and subtracting your monthly bills. There is much more to it than that. You need to get a sense of your entire financial situation, especially when budgeting with a single income.
2. Live on a budget
Living on one income successfully means having to know where your money is going at all times. You need to have a monthly budget. If you’re not yet living on a budget, now is the perfect time to create your first one. Budgeting involves tracking your expenses and creating a plan for spending your income in the upcoming month. Creating a household budget will ensure you have enough money to cover your costs and identify areas where you can cut spending.
3. Get out of debt
Being in debt makes it hard to get by as a couple or family when you have one source of income. It doesn’t matter whether it’s so-called “good debt” like student loans or “bad debt” like credit card debt. Debt is debt when trying to support a family on one income. Two great methods to consider to get out of debt are the debt snowball or the debt avalanche method. Choosing between the debt snowball and the debt avalanche is a matter of preference. The debt snowball gives you faster wins, which could motivate you. The debt avalanche has you paying less interest. Repeat whichever method you choose until you’re debt-free.
4. Prioritize your emergency fund
Having an emergency fund in place is critical for living on one income. You can’t plan for emergencies except knowing there will be unexpected expenses. That’s why you should save three to six months of living expenses stashed away. You might not want to think about surprise medical bills or an expensive car repair, but preparing for unplanned expenses will help you get through a tough time that might otherwise be a financial burden.
5. Don’t Neglect Your Savings
Once you have a fully-funded emergency fund, keep saving. Work your savings plan into your budget and treat it like any other bill. Set up automatic transfers around payday from your checking account to a savings account. That way, you’re not tempted to spend it.
6. Live somewhere cheaper
For most of us, housing is our most significant expense. Your rent or mortgage payment likely takes up much of your budget. If you can lower your housing expenses, you might free up hundreds of dollars every month. If you rent, you might be able to find a cheaper place in the same neighborhood you currently live in or close by. If you can save $100 monthly on rent, you recover $1,200 a year. If you own a house, you might downsize, handle maintenance and minor repairs, or refinance your mortgage.
7. Lower your fixed expenses
Fixed expenses, like rent, insurance policies, and others, are much harder to reduce than your discretionary spending on entertainment or dining out. Your fixed expenses are usually essential expenses that are unavoidable. However, your fixed expenses might not be as fixed as you think. Lowering your fixed expenses often involves changing your lifestyle, shopping for new service providers, or negotiating. It might be a bit of a hassle, but it can be very much worth it whether they’re huge expenses or not, especially if you’re living on a single income.
8. Become a one-car family
If you’re a single-income household, you might do well as a one-car household. Getting rid of one car means lower car insurance, less gas money, and reduced maintenance bills. It might make coordinating your schedules and using public transportation necessary, but the tradeoff could be worth it for lower monthly expenses.
9. Plan meals around sale items
Food is another of the largest budget categories for couples and families. Spending less money on groceries and coming up with a realistic food budget will free up a lot of cash. Instead of planning meals based on your cravings or whims, go through your grocery store sales flyer before you plan your meal. When you go grocery shopping, stick to the list. That way, you’re buying everything at a discount and lowering your grocery budget automatically. Prepare your meals for the week when you get home. That way, drive-thrus, takeout menus, and delivery apps won’t tempt you.
10. Cut up your credit cards
With such easy access to credit cards, impulse purchases and overspending are too easy. Besides enabling you to make impulse purchases, the interest rates, late fees, and annual membership fees are extremely high. Why not eliminate the temptation and your ability to get into financial trouble? Without credit cards, you won’t be able to spend money you don’t have. You’ll also eliminate a lot of potential financial hardship. Credit card payments will not take up your budget, and everything you own will be free and clear.
11. Embrace frugal living
is about spending money wisely, getting the most value when you spend, living below your means, and not spending unnecessarily. To live more frugally, you might:
-
- Handle things like lawn care and basic car maintenance yourself instead of paying others
-
- Cancel your gym membership and walk or do bodyweight exercises for fitness
-
- Spend more quality time with your family doing free or low-cost activities instead of taking expensive vacations
You can find ways to care for your needs on a tight budget and enjoy life at a lower cost.
12. Increase your income
If you have trouble living on one income, you only have two choices: reduce expenses or increase income. Making more money is just as effective as reducing your cost of living. That could mean asking for a raise, getting a second job part-time, or starting a side hustle. You could try available gig economy opportunities like driving for DoorDash or using your existing skills to freelance. Even if it’s just a little bit of extra cash each month, it will help.
Living off of One Income
In my parents’ day, it was one income per family. Married life meant dad went to work while mom stayed home and took care of everything else. These days, most families need two incomes to make ends meet and work toward their financial goals. However, it is possible for couples and families to get by on one income if they manage their money strategically. Living frugally becomes more of a necessity than an option for many one-income families. With careful planning and a solid commitment to making sound financial decisions, you can live on one income.
15 Surprising “Weaknesses” Employers Want to Hear About in Job Interviews
Interviewers are tired of hearing the same responses over and over again. They want to hear something original. Employers also want to know legitimate ways that candidates can improve their work. Sometimes, shedding some light on an improvable weakness or two can make all the difference.
h2 class=”entry-title”>15 Smart Tips for Living Well on a Strict Budget
10 Practical Ways to Be Frugal Without Being Cheap
You can be frugal without being cheap by understanding the difference between price and value. A cheap person cares only about getting the lowest price. Frugal people look at price as one factor that determines value.
