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How to Live on One Income & Thrive
If there is one question I have been asked consistently in the last 8+ years, it is how my family of five manages to live on one income. And I always have the same answer: it isn’t easy. But it can be done!
In this day and age, when the cost of absolutely everything has gone up like a rocket, but wages have not followed suit, it can be more than challenging. It can be darn near impossible. And I have to say, it has taken a lot of trial, and error, juggling, creativity, and will power to make it work for us.
How did we do it, then?
The short answer is, we made/make it work.
The long answer is a bit more extensive, but I will try to make the long story short, to the best of my capabilities. In essence, we have fined tuned our lifestyle, and put some ideas, plans, and systems in place to make it manageable.
If you are wondering what the whole process looks like, I am breaking it down in small chunks. I am confident that by consciously following these steps, you can also, not only survive, but also enjoy a happy family life, and live on one income, if you so desire.
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As with every aspect of life, when 2 or more people belong to a group, having open communication channels is a must. It is literally the only way to move satisfactorily forward, and avoid unnecessary confrontations. When it comes to making the switch from 2 incomes, to one, it is no different. The following are the 2 things that I feel are of extreme importance.
This might sound like a no-brainer, or maybe not really important. But it is essential to make a conscious decision as a family to make it work. Both you, and your spouse must be on the same page. Otherwise, it will be a one sided decision, and when things get difficult (and they will!), blame will fly left, and right.
While having this important discussion, make sure you share all your feelings, fears, and concerns with your spouse. But most importantly, make sure you are also listening to theirs. Both are equally important, and by being open, and honest with each other, the decision making process (not the transition itself) will be more doable.
-Be specific about how to proceed when making big purchases
Nothing, nothing can kill a budget faster than a spouse who makes the big money decisions on his/her own. It doesn’t matter if your income is big or small. Or if you are the breadwinner of the family, or not.
Talk with your spouse about how you would both like to proceed with any big expenses. Set up a minimum amount (that you are both comfortable with) that will require you have a conversation, before making the purchase. For example, you can agree that anything that costs more than $100, must be discussed, and agreed upon by both. This will ensure that an impulse buy by one of you doesn’t mess up the budget. And because you both agreed to it, there should not be any resentment.
Set up an emergency fund
This is super crucial. Having an emergency fund is like having a cushion for the unexpected. Because that’s what emergencies are: unexpected.
Our family are Dave Ramsey followers, and he recommends that the Emergency Fund is just a small one ($1,000), to get you motivated to kill the debt as soon as possible. However, he also says that, if one of you is a bit concerned about such a small cushion, it is OK to have a slightly bigger fund. Whatever the amount is that makes you, and your spouse more confident.
This could mean having enough to cover rent, and utilities for one month, in the event of an unexpected illness, or job loss. Just make sure you understand that, whatever amount your emergency fund is, it is meant for real emergencies. Not for things like renewing tags, getting an oil change, etc. And definitely not for “wants”.Those are definitely not emergencies, and can be factored into your budget.
Create a realistic budget
Again, this is a no brainer, right? Unfortunately, it isn’t. You would be surprised at the amount of people who do not have a set budget for themselves, or their families.
The importance of a budget is one I can’t stretch enough. And not only for those living on one income. Truth is, no matter how much money you make, or if all your family members work, and contribute to the family finances. If you don’t have a proper budget set up, all your money will fly out the window quicker than you can say “Quidditch”.
For a family that is transitioning from 2 incomes to only 1, this is even more important. A budget will help you clarify what are wants, and what are needs. It will also give you a more realistic view into how the money is spent every month, and make it easier to readjust when needed. The following are the areas where, by making small changes, you might see huge improvement:
-Change your spending (purchasing) habits
This is what I struggled the most when we went down to one income. I have never been one to waste money on fancy, overpriced things, but I could totally drop way too much money at Target. Or the bookstore.
However, as I soon discovered, cutting the family’s income almost in half came with necessary adjustments. And let me tell you, it was hard! We have always managed our finances together, as our money, so that was a start. But, our income was not the same as before, which meant we often struggled on the last few days of the pay period.
And yes, it was all my fault. I did all the shopping. But I shopped for whatever I wanted, not what we needed, or what we could afford.
Once I realized I was at fault, I buckled up, and did a complete overhaul of my shopping habits. Here are some examples of what we did to make our money go much further:
Discovering coupons was probably the best that could have happened to us! I happened to be scrolling thru TV channels once, when I stumbled upon the Extreme Couponing show. What was portrayed in that show definitely honors its name, and I had absolutely no desire to buy 1,000 bottles of mustard, or barbecue sauce. But the idea of learning how to shop using coupons was incredibly motivating to me.
Nowadays there are a million ways to save on groceries. Some require you to clip coupons, and some are either digital coupons, or digital offers on sites/apps like Ibotta, and Savingstar. No matter which method you prefer, I promise you that if you use the coupons correctly, and shop sales, you will be able to save tons of money, and keep your grocery budget under control.
Another great way to make your dollar stretch further, is by shopping the clearance shelves. I know some people are a bit hesitant to buy from clearance, especially food. This is because most think that if it’s been clearanced, it must be about to go bad. Wrong! Many times a store puts an item on clearance because the packaging is not perfect. Seriously.
Make it a habit of checking the clearance shelves, or racks when you have the time. While this is not guaranteed, you could definitely get pretty lucky, and score big time!
-Shop second hand for your growing children
I have always been a bit frugal, but nothing made me more frugal than seeing my youngest daughter outgrow her new clothes in a month or two. That’s when I realized I was basically throwing my money away by buying new all the time. And so, I decided to give thrift, or second hand shopping a try, and haven’t looked back since!
What’s more, I have found incredible deals on quality items that are new, with tags. Or that look like they are new, even if there are no tags on them. The point is, you can stretch your money much further, if you are willing to overlook the “used” aspect of thrift store/second hand shopping.
Other alternatives to this are local buy/sell/trade Facebook groups, Offerup, Craigslist, and even eBay!
Focus on yourselves
It can be hard to watch your friends, and family going in all this expensive trips, and eating out at fancy restaurants all the time. And social media has only made us even more aware of this. However, I have found that it is much less impressive when you consider how these people can accomplish this.
Look at it this way. If lack of a budget, and mounting debt crisis are an indicator, then I’d say at least 75% of those people are actually paying a high price for their luxuries. Not everybody is enslaved by debt, but too many people are.
Now ask yourself: Do I really want to drop $10,000 on a luxurious trip, that I can’t really afford? Do I want to pay the high price of having even more debt, just to say I did something? Because, chances are, that’s what most people are doing.
Focus on your goals, plans, and the reality that your budget tells you. Trust me, if you are not swimming in debt, and can actually pay for your expenses without using credit cards, then you are in a much better place than many. And one thing you don’t want to do is pile more financial obligations, when your income is actually going down.
Understand your financial “limitations”
Along the same lines, you must understand that there might be some “limitations” in your new one-income family lifestyle. I use quotations, because to be honest, most limitations are just unrealistic expectations.
Take your grocery budget for example. If you are used to dropping $800 a month on groceries, you might need to reduce that amount. But that’s not really a bad thing! Chances are, you have just been wasteful (without meaning to). Or maybe you are not used to creating a grocery list, and setting up a grocery budget, so whenever you go to the store, you just buy whatever looks, or sounds good.
The best way to take charge of your money, and how it’s spent, is to set up a budget, and stick to it. Give a name to every single dollar that goes in or out of your account. Setting up a realistic budget will actually free you from money worries, and allow you to enjoy your life much more.
As I have said before, we are sort of frugal around here 😉 I am not like, the most extreme cheapstake or anything like that. But I hate being wasteful, and try very hard to use my creativity for projects, ideas, or even for my kids’ activities.
It’s not always easy, of course. But it is always very rewarding, when you can make do with your resources, instead of spending more money. Here are some things we do here:
I am definitely not the most crafty person I know. But I do like to make my own things, if I can. It might not be fancy, but if it’s pretty enough, and we worked hard at it, then I am happy with it.
That’s how I managed to re-decorate my son’s bedroom for just over $300 last year. It isn’t fancy. Or magazine-worthy. But it’s nice in the cleanliness, and simplicity of it. And I did most of it myself! Well, I did buy some things. But I kept my spending under wraps.
In another example, my husband made a very nice, and simple LEGO tray for our daughter. Because she plays on a small table, they were constantly falling off the sides, and the base plates were all over the place. So we looked around in our garage, and found we had all we needed to make the tray. It isn’t fancy. But it’s sturdy, and very functional.
And it cost us nothing!
I am sure you have found yourself tossing things that can be reused. I know I have. As recently as a couple years ago, I started saving plastic, and glass jars. I reuse these for a number of things. Mainly for storage, for things like craft supplies, nails/screws, and even for my homemade sofrito. And my husband reuses the Cheese Whiz, or pasta sauce jars to store the grease he drains from the pan after he browns the ground beef. And I am planning on making some gorgeous scented candles with the glass jars as well.
Of course, we do own a few nice sets of bowls with lids, but we mostly use those for leftovers, and things like that. But when we shop for spices in bulk, it comes in handy to have some spare jars with a screw on lid.
Those are just examples of what you could do to reuse jars. But I am sure you could get pretty creative with other things as well, and start reusing them, instead of buying more.
Goes without saying, but sometimes, all you need to do is look around you, to realize how much less stressful your life is, when you keep it simple. Take the time to appreciate all you already have.
If it helps, list all the things that you have. Not physical things, necessarily, but maybe things like your health, your family’s health, a roof above your heads, the ability to pay your rent/mortgage, utilities, love, etc.
When going for a one-income route, not having money worries, or too much “stuff” will open up your eyes to how truly great your life it.
Find joy in the company, not things
Along the same lines, if you take a closer look, you will truly understand how the people in your life are what make it exceptional. It will not matter if your Disney vacations are now history, and you decide on a staycation instead. All that will matter is that you are together.
You could brainstorm ideas on what to do for fun as a family. Ask your children for ideas as well! You could even make a cute suggestions box, and have them drop them there. But set up some ground rules first: Give them a max budget, and distance limits for the activities, for example. You could also motivate them to think outside the box a little, if you give a “bonus” for free, or very inexpensive ideas. (The bonus could be an extra scoop of ice cream 😉 )
How to live on one income & Thrive
There is really no secret sauce for living a fulfilled life on one income. However, if you concentrate on the areas listed above, you will be able to not only survive, but enjoy your life fully. I guess I can say that the real secret lies on how prepared, organized, and realistic you are about it. In the end, all that will matter is that you move forward in the best way possible, and that you make the best of the resources you already have.
Just remember, to make the one-income lifestyle work you must:
- Communicate with each other
- Set up an emergency fund
- Create a realistic budget
- Focus on yourself, and your family
- Understand financial “limitations”
- Get creative
- Appreciate the simple things
- Find joy in the company, not things