Living as a single income family is possible whether you’re planning for it or thrust into it. When you go from two incomes to one, there will likely be some tough choices and changes ahead. Here are my best tips for navigating life as a one income household.
Posted By Sara Graham
Posted In Budgeting
Last Updated: 09/08/2022
Tips for Living Frugally on One Income
Many families rely on two incomes to pay bills, maintain the household, and take care of family obligations.
Then life happens. Two incomes suddenly become one. The plans and the financial commitments made were based on being a dual-income family.
Whether it’s a job loss, an illness, or some other cause, going from two paychecks to one is scary. But it can be done with some planning and adjustments.
Is It Possible to Live Off One Income?
It is possible to live off one income, but it’s not easy for most people. Living on one income requires creating and sticking to a budget, having money put away for emergencies, getting and staying out of debt, reducing expenses where possible, spending money wisely, and living a frugal lifestyle.
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 one of our income sources, we had no plan. We had no idea of the real costs involved. What we thought it would be like and what it was actually like were nowhere near the same.
Here are the tips and strategies we used to live on a single income.
1. Do the Math
Things will get more difficult than you’re used to and family life will change. Money matters become even more important. Prepare as much as you can 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 save for retirement?
- 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 just adding up your new household income and subtracting your monthly bills. There is a lot more to it than that, especially if you go from a two-income family to a single-income family unexpectedly.
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 living on a budget yet, now is the perfect time to create your first budget.
If you’re going to meet all of your obligations and expenses, you need to know how much is coming in and how much you have for bills and other monthly costs.
Budgeting involves tracking your expenses and creating a plan for how you spend your income in the upcoming month. By budgeting, you’ll ensure you have enough money to cover your expenses and you also identify areas where you can cut back on your 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. The less debt you have, the easier it will be and the more room you’ll have when you drop to one 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 you’re trying to support a family on one income.
If you’re carrying a lot of debt and you only have one income, getting out of debt should still be a high priority. To get out of debt as quickly as possible, you can use the debt snowball or the debt avalanche method.
Start by listing out your debts. If you’re doing the debt snowball, order them from smallest to largest by the amount you owe. If you’re doing the debt avalanche, you’ll be paying off your high-interest debt first, so order your debts from highest to lowest interest rate.
With both strategies, you make the minimum payment on all your debts except one. For the snowball, you put as much as you can toward the debt with the lowest remaining balance. With the debt avalanche, you pay more on the debt with the highest interest rate.
When you pay off a debt, add the monthly payment you were putting on the debt you zeroed out to the minimum payment on the next one. Repeat until you’re debt-free.
Choosing between the debt snowball and the debt avalanche is a matter of preference. The debt snowball gives you faster wins, which could be a motivating factor. The debt avalanche has you paying less interest.
4. Prioritize Your Emergency Fund
Making sure you have an emergency fund in place is critical for living on one income. You can’t plan for emergencies, except to know that there will be some unexpected expenses in your future. That’s why you should have 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. If you think you can get by without emergency savings, here are some emergency fund examples that will convince you otherwise.
5. Live Somewhere Cheaper
For most of us, housing is our biggest expense. Your rent or mortgage payment likely takes up a big percentage 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 a month on rent, that’s $1,200 a year you recover.
If you own a house, you might downsize, handle maintenance and minor repairs yourself, or refinance your mortgage.
A cheaper place to live is almost always available if you look for it. Since housing takes up a large portion of your household expenses, reducing your housing costs makes sense.
6. Lower Your Fixed Expenses
Fixed expenses like rent, car insurance, and others, are much harder to reduce than your discretionary spending on things like entertainment or dining out. Your fixed expenses are usually essential expenses that are unavoidable. Your fixed expenses might not be as fixed as you think they are, however.
Lowering your fixed expenses often involves changing your lifestyle, shopping around for new service providers, or negotiating. It might be a bit of a hassle, but it can be very much worth it. Especially if you’re living on a single income.
7. 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.
8. Plan Meals Around Sale Items
Food is one 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 deciding what you’re going to eat for the week based on your cravings or whims, go through your grocery store sales flyer before you do your meal planning. Make your shopping list and your meal plan based on what’s on sale this week.
When you go grocery shopping, stick to the list. You want to prepare meals that are based on what you have already in your pantry and refrigerator, plus what’s on sale. That way, you’re buying everything at a discount and lowering your grocery budget automatically.
Unless you’ve never been to a restaurant before, you know that cooking at home is significantly cheaper than eating at restaurants. Spend a day prepping meals for the week. That way, drive-thrus, takeout menus, and delivery apps won’t tempt you.
9. Cut 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 yourself in financial trouble?
Without credit cards, you won’t be able to spend money you don’t have. You’ll have to use cash to make all of your purchases. Save money for larger expenses by budgeting for them and putting away a portion of your income each month.
By eliminating credit cards, you eliminate a lot of potential financial hardship. Credit card payments will not take up any of your budget and everything you own will be free and clear.
10. Embrace Frugal Living
Frugal living is about spending money wisely, getting the most value when you spend, living below your means, and not spending unnecessarily. When one of you isn’t working, 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
11. Increase Your Income
If you have trouble living on one income, you only have two choices: reduce expenses or increase income. When you’re tracking your expenses or making your budget, you can probably identify multiple things to stop spending money on to save money and find any bad spending habits to eliminate. 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.
Making extra income is often the fastest way to improve your financial situation. The biggest advantage of increasing your income is that there is no limit on how high you can raise your income level.
No matter how determined you are to cut expenses, you will get to a point where no further cutting is possible. There is no hard limit to how much extra money you can bring in every month.
Living Off of One Income
In my parents’ day, it was one family with one income. Dad went to work for his salary while mom stayed home and took care of everything else. These days, it seems most families need two incomes to make ends meet and work toward their financial goals.
Couples go from two incomes to one income for several reasons. Some married couples plan to live on one income with one stay-at-home parent when they have kids. Health problems, job loss, job changes that require moving, divorce, and taking care of an elderly parent or child are common scenarios where a dual-income family suddenly becomes a one-income family.
Whether you’re unexpectedly down to one income or you choose to live on one income, there will be financial challenges ahead. Living frugally becomes more of a necessity than an option for many one-income families. With careful planning and a strong commitment to making sound financial decisions, you can live on one income.
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