How to Live On One Income (and never feel poor)
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How to Live On One Income
When both partners work, the household earns a higher income, which can provide greater financial stability, increase savings, and allow for more flexibility in terms of lifestyle choices. But not every household has dual income, and many manage on a single income.
Whether it’s due to a job loss, a desire to stay at home with children, or other circumstances, living on one income can be challenging. But it’s also possible to thrive and enjoy a fulfilling life – and never feel poor.
1. Create a budget and stick to it
Creating a budget is essential for anyone who wants to manage their finances wisely, but it’s especially important when you’re living on one income.
A budget is a financial plan that outlines how much money you have coming in and how much you plan to spend on various expenses. It’s a way to see where your money goes, and creating one allows you to prioritize your spending and allocate money towards things that are most important to you. A budget can also help you feel more in control of your finances and reduce money-related stress.
To budget effectively, start by tracking your income and expenses for a month to get a clear picture of your spending habits. Next, determine your essential expenses (such as rent, utilities, and groceries) and allocate funds accordingly. From there, determine how much you can comfortably allocate towards discretionary expenses like entertainment or eating out.
Remember to be realistic and adjust your budget as needed to stay on track, and don’t forget to allocate funds for savings and/or debt repayment.
2. Find ways to save money on groceries
Groceries are a significant expense for most households, but there are ways to cut back and save money.
Consider meal planning and cooking at home instead of eating out or buying pre-made meals. In addition, you should regularly look for sales and coupons, buy in bulk, and shop at discount stores or farmers’ markets. If you have the space, start a garden to grow your own produce.
Also, take advantage of cash back apps like Ibotta, which lets you save on groceries without clipping coupons. Browse offers on the app, add them to your account, shop as usual, and then upload your receipts to earn cash back. Ibotta partners with a wide variety of retailers, including grocery stores, drugstores, and online retailers. As a bonus, use code “renmwpo” at registration and Ibotta will give you $5 when you submit your first receipt.
3. Look for ways to earn extra income
Living on one income doesn’t mean you can’t earn “extra” or “side” money. Even if you don’t want a full-time job outside the home, maybe look for ways to monetize your hobbies or skills. Nowadays, there are so many ways to make money, and it’s possible to earn a decent side income or part-time salary only working one or two hours a day!!
Options to consider include blogging/freelance writing, affiliate marketing, photography, web design, etc. Earning side hustle income can provide additional financial stability and security, and it can help you pay off debt more quickly, build up an emergency fund, or save for other long-term financial goals. (Related: Download my insider’s tips to making money as a freelance writer and leverage your existing knowledge to make extra money).
4. Use free resources to entertain yourself
Entertainment can be expensive, too, but there are plenty of free resources available. Visit your local library for books, movies, and music. Check out free events in your community, such as concerts, festivals, and art shows. Also, take advantage of free online resources, such as podcasts, TED Talks, and educational courses. Here’s a list of 100 free ways to entertain yourself and family.
5. Build an emergency fund
Living on one income can be risky, so it’s important to have an emergency fund in case of unexpected expenses or income surprises. Aim to save at least three to six months’ worth of living expenses in a separate account for an emergency. I always recommend keeping a small amount of cash in a regular savings account for same-day access. But for the bulk of your emergency fund, consider a high-yield savings account.
To build an emergency fund, first set a savings goal by calculating how much money you’ll need to cover your living expenses for 3 to 6 months. This includes rent/mortgage payments, utilities, groceries, and other necessary expenses.
Once you have a savings goal in mind, create a plan to achieve this. Identify areas in your budget where you can cut back. This might include limiting dining out, canceling subscriptions you don’t use, or finding ways to save on utilities. Another effective strategy is to automate your savings. Set up transfers from your checking account to your emergency fund on a regular basis to save consistently.
6. Avoid lifestyle creep
When only one partner works and the household relies on a single income, it’s important to avoid lifestyle creep.
Lifestyle creep refers to the tendency to increase spending as income increases. This can happen gradually, as expenses such as dining out, shopping, or entertainment become more frequent and more expensive.
It’s important to prioritize saving and living within your means, which will involve making a few sacrifices. But it’s worth it. You’ll have greater peace of mind and it’ll be easier to achieve your financial goals.
What’s your best tip for living on one income? Share your thoughts and experiences…