Living on just one income seems like a fantasy for many, but it doesn’t have to be. Yes, it’s harder to do now than it was for our grandparents, but it’s still possible depending on your priorities. So it’s not easy, but it comes with a lot of bonuses that aren’t something to scoff at. Whether or not living on one income is a necessity, or something you want to do so you can reach certain goals, I’ve got tips to help you along the way – if you plan your finances carefully, you’d be surprised at how much you can accomplish.
Life On just One Income
If you’re living off one main source of income, but your household has two or more, that is clearly great. That extra source of income can be used for investing, travel, eliminating debt, buying a house, or just about any other financial goal you may have! However, if you live off of one income, and just one income, you might have issues. It can be hard to meet the needs of a family on one income, but it’s still doable – especially with the help of a partner. For example, one person can focus on making money, and the other can focus on being frugal and eliminating expenses like childcare.
How To Make A One Income Household Work
1. Set A Budget
In the past, I’ve made articles on budgeting, and even an article on specific techniques like zero-based budgeting. Either way, pick a poison, learn the ins and outs, and refine it as you go. A budget (and a monthly review of expenses) is a huge lifesaver and will serve you well over the long run. Using it, you can identify ways you’re spending far too much, or “mandatory” expenses that you have no choice but to find a way to lower (like a car payment or expensive mortgage). It will also help keep you in the right state of mind for your daily expenses.
For example, when you know what your monthly grocery budget is before you go to a store, it helps you pick and choose what you actually need instead of potentially bringing home far more than is necessary. Of course, there is merit in shopping in bulk if you know what you’re doing.
2. Find Ways To Be Frugal And Cut Expenses
I think it goes without saying, but cutting major expenses can be the difference between being able to make one income work and struggling to make ends meet. As I’ve said before, the three main expenses in your household that tend to be the easiest to cut are housing, transportation, and food.
Be honest with yourself. If you have more house than you need, and you can’t pay the bills, move to a smaller place. If you have a car payment, see if there is any way to eliminate or reduce it. Also, if you have multiple cars, consider if you really need that many (if you can be a one car household, it saves a lot of money). Last, if you find yourself eating out a lot, stick to buying produce from the store and cooking. Meal prepping is a great way to cut costs and eat healthy at the same time!
Of course, those aren’t the only way to cut expenses. If you notice any major expense that can be eliminated or mitigated, do it. For example, you might be paying far too much for certain utilities like electricity or internet service. In those cases, find ways to cut the electric bill (a broken or damaged appliance can make the bill skyrocket), or find a new internet service provider. On top of that, make sure your insurance premiums are under control.
I know it may sound odd, but you can even use credit cards (assuming you have the discipline) to help with expenses by taking advantage of their liability protection and cashback rewards systems. There are a myriad of simple tricks like that you can use to make minor differences that add up. You can even get handy and do your own repairs and home projects! However, I still believe that the big three – housing, transportation, and food – should be your priorities.
3. Kill The Debt To Free Up More Space In Your Budget
I hope this goes without saying, but work on knocking out the debt in the best way for your situation. It may be hard, and the budget may be tight for a while, but once you’re done you’ll have a lot more money at your disposal. For example, if you’re paying a few hundred dollars per month for debt like student loans, a car payment, or a credit card balance – imagine how much it would mean if that money could be used for other expenses, savings, or investments.
Personally, I would recommend eliminating debt and then using that extra money in your budget for investments, but I understand that if you’ve been struggling to make ends meet you may have other things to take care of (like home or car repairs).
4. Buy A House If You’re Staying Put
Yes, I know that saving up enough for a down payment on a home while living on one income can be hard. However, if you find a way to manage it, you can usually (it does depend on the market) land yourself a mortgage that is considerably cheaper than what rent would be – even on a smaller house. Of course, buying only really makes sense if you’re staying put for a while, so don’t take that decision lightly.
If that isn’t an option for you at the moment, try getting your rent lowered. Unfortunately you only have two options there. The first is to negotiate with your landlord, but depending on how hot the renter’s market is, and their overall demeanor, they may not be willing to budge. Alternatively you can find a cheaper place nearby and move there instead.
One thing worth mentioning – if you live in a medium or large sized city, and you can still find work in your field in a smaller town (rural or otherwise), you might be able to slash your cost of living by a large margin. If living in that big city saps all your money, seriously consider moving farther away.
5. Get Serious About Saving Money And Investing In Your Future
This goes without saying, but the more money you save and invest now, the easier life will be for you later. Save up for an emergency fund. If you’re able to save for those rainy days, they become less of a financial disaster when they come. If you need help saving and investing, Acorns is a nice app that can help you get started. As for investing, you can actually build another source of income using it.
If you’ve grown out of something like Acorns (which is essentially training wheels), then I recommend M1 Finance. M1 Finance is a great brokerage that I personally use – it makes building a portfolio pretty simple, but completely customizable. If you want more information on investing, check out my free guide to get you started.
Conclusion
Living on one income can certainly be difficult, but it is possible. Planning is important, but the most important thing is staying consistent and following through. There will probably be a rough period of adjustment, but once you get yourself set up, it’s gets much easier over time – and that’s speaking from personal experience. If you have any thoughts or tips, be sure to include them in a comment!
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