How to Live on One Income
Regardless of what you might have heard, living on one income isn’t impossible.
Sure, it’s difficult at times. But with a shrewd approach to budgeting, you can steadily increase your savings account over time and make it just fine as a one-income household.
With all this in mind, let’s take a look at what you need to do to get by living on one income.
How to get by on one income
- Form a budget
- Save money in an emergency fund
- Pick up a side hustle
- Examine your location
- Minimize taxes
- Ask for help if needed
- Slash your expenses
1. Form a budget
The most important thing you can do when living on one income is to form a budget. This is especially critical if you have multiple family members living off one income.
Money can go very quickly, so it’s critical to determine exactly where every dollar is going. This may include food, housing, car payments, date nights and entertainment, education, credit card debt, daycare costs, savings, and investing if any money is left over at the end of the month.
You can also start a spreadsheet and do it the old-fashioned way.
- Why You Need a Personal Budget
- Personal Capital vs Mint
- The 6 Best Budgeting Apps for 2021
- YNAB vs. Mint
2. Save money in an emergency fund
As you budget, it’s critical to put as much into savings as possible.
The point of saving money isn’t to maximize growth. That’s where investing comes into play. The truth is that interest rates for deposit accounts are so low at the time of writing that it doesn’t make sense to put money aside with hopes of making money on it.
Instead, you need to put money aside in an emergency fund to protect you and your family from an unforeseen situation. For example, you might lose your income, get into an accident, or encounter an unexpected expense—like having to pay for a new refrigerator or water heater.
Many families are just one small emergency from a crisis. Far too many find themselves in a situation where they’d have to take on debt or ask for assistance just to cover their living expenses.
Don’t let this happen to you. Plan ahead and put money away into an emergency fund while you can.
3. Pick up a side hustle
Just because you make less money than you’d like doesn’t mean you’re forever stuck earning one paycheck.
In case you’re unfamiliar, a side hustle is a second or third job, and it can be anything from walking dogs to tending bar to driving for rideshare services like Uber and Lyft. Or you could take small household jobs through TaskRabbit or shop for others via InstaCart.
If you’re in a position to take on more work, you could potentially double or even triple your salary, stretching your single income and putting more wiggle room in your monthly budget.
- 31 Best Side Hustle Ideas to Make an Extra $2,000/month
- Top 33 Ways to Make Extra Money
- Get Paid to be a Personal Grocery Shopper
4. Examine your location
Where you live plays a huge part in determining your quality of life. This fact is particularly important for someone with a solo income.
For example, getting by with a single income is very difficult in an expensive city like New York or San Francisco. You may have an easier time moving to an affordable city or a rural area with lower taxes and more manageable food and living costs for a single income household.
If money is tight, reconsider your living situation. Make sure the place you’re currently residing aligns with your budget and long-term financial goals.
5. Minimize taxes
To get by on a single salary, it’s critical to minimize taxes. This becomes increasingly important for high earners.
For the best results, talk to a tax advisor to ensure you’re claiming as much as you can in deductions.
It may also be a good idea to reconsider how much you’re withholding for taxes if you need more money on a monthly basis to make ends meet.
6. Ask for help if needed
If you absolutely need help, consider reaching out to the government.
Struggling families can receive assistance through various welfare programs. It’s not worth suffering financially when Uncle Sam can step in and provide temporary support if you suddenly become a single-income family.
Some options include welfare like Temporary Assistance for Needy Families (TANF), food stamps, meal plans, and unemployment benefits. There is also Medicaid and the Children’s Health Insurance Program (CHIP), among others.
7. Slash your expenses
Living on one income requires a fair amount of sacrifice. Trips to the movies, nail salon, rock concerts, or vacations may become a thing of the past if you’re on a limited income… and this is perfectly okay!
Make a list of your top priorities and consider eliminating expenses that hurt rather than help your finances. For example, you probably don’t need to pay for multiple streaming services or go out to eat three nights per week.
Consider using a service like Truebill or Trim to save money automatically. These services analyze your spending habits by linking to your bank accounts and either cancel or negotiate agreements to save money.
Beyond that, it’s critical to embrace the money-saving mindset and start living a simpler lifestyle free of excessive purchases. Even if you bring in more cash with a side hustle, there are better ways to spend money than on frivolous purchases.
- How to Spend Less Money: A Comprehensive Guide
- Expense Calculator | How Much Do You Spend?
- How To Save Money on Groceries in 2021
- Basic Financial Planning for Beginners
Money-saving tips for living frugally
Need to get by living on one income? Here are some tips to keep in mind.
Coupons are a single income family’s best friend.
Instead of throwing away coupon books, sort through them and look for discounted items. You could save money on household items and your grocery budget just by taking a few minutes to browse deals.
This is one of the most overlooked money-saving tips for millennials. But when used effectively, couponing can be a great financial strategy.
Just imagine how much better hamburgers will taste when you get them on sale!
Ditch your car if possible
If you’re in a position to get rid of your car, hawk it and don’t look back. You’ll save money on insurance, gas, maintenance, property taxes, and parking.
Of course, this may not be realistic if you have kids or live in a rural area. But if you live in a place with great public transportation or nearby amenities, it may not be the worst idea in the world.
Owning a car can be a money pit. And at times, it can be more of a luxury than a necessity.
Visit thrift stores
Don’t think you’re too good to shop at thrift stores for clothes. Oftentimes, people get rid of perfectly nice articles of clothing, enabling shoppers to buy designer items at dirt cheap prices.
Some thrift stores also offer household items like chairs, sofas, lamps, and tables, as well as books and toys for kids. As they say: someone’s trash is another person’s treasure.
Go to tag sales
Neighbors often want to get rid of perfectly good items to make room for new stuff.
Do you really need a fresh-off-the-shelf, brand-new TV? Or would a model a few years old be okay? Do you need to buy brand-new clothes? Or would you still look sharp buying a secondhand suit from a well-to-do neighbor?
When money’s tight, you need to get creative about spending.
Grow your own food
Food can be very expensive, especially produce because it doesn’t last very long.
One of the easiest ways around this problem is to grow your own food if you have the time and space to pull it off. You don’t need much room to grow tomatoes, peppers, lettuce, or cucumbers.
What’s more, if you have an abundance of items, you could potentially form an agreement with a local grocery store and sell back excess items. Money doesn’t grow on trees, but fresh produce can!
Frequently Asked Questions
How can I make money as a stay-at-home parent?
If you’re a stay-at-home parent, you can earn extra money babysitting, managing social media, or teaching English online. These types of services and a number of other online gigs can help make the cost of living easier.
I’m in debt. What should I do?
If you’re in debt, here’s some bad news: You have to get used to frugal living. It’s not enough to simply pay off your credit cards and student loan debt. The trick is to fix the financial habits that put you into debt in the first place.
That said, the best thing you can do is to get out of debt as quickly as possible. Consider a side hustle like driving for rideshare services or delivery companies like Amazon to bring in extra income and make payments. Or get a part-time job at a local restaurant.
At the same time, you should cancel your Hulu and Netflix subscriptions, stop ordering food online, and rethink your lifestyle to save money and lower your monthly bills.
You may also need to downsize your apartment or house to get out of debt.
What happens if you miss mortgage payments?
If you miss a mortgage payment and enough time goes by, the bank could seize your house. This process is called foreclosure, and it’s very serious.
If you run into an emergency situation, such as a job loss, make sure that you’re prepared for it. Consider liquidating investments or borrow money if you have to.
It’s not ideal. But it’s probably better to borrow money through a loan than to stop making mortgage payments and lose all the equity you’ve built up over time.
The Bottom Line
Trying to make ends meet with a single income can be a real challenge at times. Especially if your family’s single income status was unexpected. However, it can also come with some advantages.
For starters, it can force you to be smarter about money and better about saving cash and avoiding waste. It can also make you more creative about personal finance and ultimately make you a stronger person.
You may even turn into a great saver without a second income to support you.
At the end of the day, don’t worry if you have to get by on a single income. Plenty of hardworking Americans do this. It’s all about making the right decisions, minimizing debt, and knowing what to prioritize in your budget.
The most important thing you can do is keep your hopes up and maintain a can-do attitude about making money. With the right DIY approach to generating income, you can move beyond a single source of income and take on several side hustles—to the point you’re flushed with cash in no time.