We have on occasion lived off one income due to job loss or our desire to aggressively pay down debt. Thank God we always survived the job losses and achieved our goal of becoming debt-free. It was mainly due to living frugal, having an emergency fund, following God’s plan. It is only through His grace and being good stewards over what He provided that helped the most. Here are my tips on how to live on one income.
#1 Tip on how to live on one income – The Deciding factors
Living on one income may or not have been your decision. It could have been because of a job loss, some other unforeseen circumstances, or a medical issue. Regardless of any of the aforementioned events a decision to live on one income was made.
In the past, we have experienced job loss that required us to live on one income at some point in our married life. This was not our decision. However, these job losses lasted less than a month. Another time, the decision was made to eliminate debt expediently. For instance, we wanted to pay off our student loans, so we lived on one income to get it paid off in less than 6 months. This was for a short time, or it could be considered the dry run for our current situation. We are currently living on one income permanently. In any case, this tip on how to live on one income is based on the decisions made, and we had to adjust our spending accordingly.
#2 Tip on how to live on one income – The Budget
The budget is the main component of living on one income. You must look at what is coming in and what is going out. There cannot be a negative balance. Therefore, every expense had to be reviewed as necessary or not. You will have to slice out the fat with the proverbial knife. Then determine how and when you will handle any unexpected and expected financial situations. Since we are focusing on income let’s quickly review the components of your paystub.
Most states require employers to provide pay stubs. Your paycheck should include the following information:
- Pay period start and end date
- Hours worked
- Gross pay
- Net or take-home pay
- Federal and state income taxes
- Local taxes
- Medicare and Social Security taxes
- Deductions for benefits
- Wage garnishments
- Year-to-date totals
- Paid time off (PTO) balances
How do gross income and deductions play into your net pay?
What you make and what you bring home are two separate things. Use this net pay calculator to help you understand the difference between your gross salary and net salary if you are starting a new job with a new income or location change. There are pre-tax deductions for healthcare and 401k investing that reduce your taxable income. There could also be after-tax deductions that do not reduce your taxable income. Such as additional insurance benefits or a garnishment.
The next thing affecting your paycheck could be your tax bracket. Your income tax will be based on how you set up your W2 with your employer. This includes your marital status, dependents, and any additional funds you requested withheld to reduce your tax liability. Finally, any garnishments of your income by a creditor due to non-payment of a debt. This can also include the government because of owed taxes or student loans. After reviewing your net pay now you need to calculate if you can live on one income. Use this handy one income vs two income calculator. This will help you see the impact of adding or removing a spouse’s or partner’s income.
#3 Tip Negotiate Some Expenses
Refinancing a home or Car loan is the best way to lower the interest you are currently paying. This will reduce your monthly payments. From your home mortgage refinancing, you may be able to cash out some money to do some improvements on your home or pay off debt with much higher interest rates. Speak with a mortgage specialist to determine if this is possible.
You can also negotiate with your credit card lenders by reducing the interest or the amount of the debt. Eliminating debt is the number one goal for living on one income.
Begin searching for low rates on auto and home insurance. Many deals are given to new clients rather than existing clients. There are no rewards for loyalty these days. Business models are geared towards attracting new customers rather than maintaining existing customers.
Consolidate debt – be mindful of fees and scams from Debt Consolidation Companies. Research thoroughly. Check with your local Better Business report. Search for reliable sources for reviews. Get every promise and commitment in writing. Ask about refund policies if they are unable to help you with their debt consolidation program. Tread carefully in this arena.
Join programs offered by utility companies to level out variable expenses to reduce costs during peak seasons. It is easier to pay one set amount throughout the year rather than higher amounts occurring seasonally.
These tips on how to live on one income should be very helpful in creating your new one-income budget.
#4 Tip On How to live on one income – Savings
No matter how much the one salary you choose to live on you will still need savings. Frankly, stuff happens at the most inopportune time. Home repairs, auto repairs, medical expenses, you name it. We have always maintained several emergency funds in our household. One for household emergencies and we each maintained an emergency fund for our income. So, for us three in total. Here is our plan on how we handled expected and unexpected financial situations.
The household emergency takes care of:
- Repairs for our home
- Special projects
Personal emergency funds cover:
- Loss of jobs
- Personal emergencies
- Auto repairs and maintenance
- To support each other
- Unexpected Medical Expenses
To create your emergency fund(s) Begin by totaling all your essential expenses per month after reviewing your new one-income budget and divide by the number of months you plan to begin living on one income. For example, I want to live off one income within the next 12 months. Total monthly essential bills are $3000.00. I desired to save a three-month emergency fund. $3,000 x 3 = $9,000. $9,000 / 12 = $750 to save each month for 12 months.
For the household emergency fund, I would suggest you save enough to cover your home insurance deductible with a few thousand dollars over for miscellaneous expenses that may arise. These are great tips on how to live on one income when trying to figure out how much you need to save and for what.
#5 Tip on how to live on one income in case of a job loss
Job loss can be unexpected or expected so you will need to plan for the worst-case scenario. You may have to understand that it could take a while to get back into the job market. Regardless of the timing, you must have a plan to pay your bills.
Start by prioritizing your expenses. Food, utilities, transportation, and then the rent/mortgage. You need to eat to sustain yourself and your family. Since utilities can be shut off immediately you need them to be second priority. Transportation is 3rd since you need it to find work. Finally, housing is last because that takes longer to lose. Hence, even though it is important to have a roof over your head it cannot be immediately lost. Credit cards, loans, and other expenses can’t wait. Even though they may negatively affect your credit, for now, they do not protect your necessities such as food, utilities, transportation, and housing. You can always repair your credit down the line.
Now that we have established the priorities of your expenses. Now to plan how to pay these expenses. During this time of unemployment your main source of income will be your spouse’s income (one-income), hopefully, unemployment, followed by any severance you receive from your employer, and finally your emergency fund savings. You typically should have 3 to 6 months of emergency funds in the bank. On average, it takes about 3-6 months to find a new job. Having a fully-funded emergency fund along with unemployment will allow you to extend your job search to almost a year. However, depending on your field of work, location, and competition it could take just a few weeks. Nevertheless, you do not want to exhaust all your resources while out of work.
Pin for later
#6 Tip on how to live on one income by choice
Living off one income by choice takes lots of planning. The planning should begin way ahead of your targeted date to seamlessly implement your plan. First, create a new one-income budget to gauge whether this is doable. Second, begin to save based on your current needs. A three to six months emergency fund is great, but 12 months would be better. It is always best to have more savings than you need. Start eliminating all debt. Debt is the biggest drain on current and future economic resources.
Finally, create a plan to the best of your ability of all possible events that could happen to threaten your financial stability. Also, consider doing a dry run. We had done this periodically when one or the other spouse lost a job and when we wanted to pay off debt such as student loans. So, when I lost my job during the pandemic it was easy for us to adjust to living on one income. These tips on how to live on one income are great to practice until you are perfect.
#7 Tip on How to live on one income and still have fun
- Movie night at home
- Library Events and resources
- Reading a book
- Play board games
- Watch a sports event on TV
- Visit a Farmers Market
- Thrift Shopping
- Listen to Music
- Crafting or DIY Projects
- Learn a new skill
- Have a yard sale
I love any and all tips on how to live on one income that includes fun.
#8 Tip – Giving
I believe that no one can out-give God. If you want to receive any kind of blessings, be it monetary or not you have to give. I believe in tithing as well as giving of my time and talents. Giving is a fundamental aspect of managing your finances. Bringing your tithes and offerings is the one thing God allows us to test His faithfulness. “Bring the whole tithe into the storehouse, that there may be food in my house. Test me in this,” says the Lord Almighty, “and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it.” Malachi 3:20
I have tested Him many times and He has come through for me. God has found very creative ways to free of money or provide a path to eliminate debt. I am testing Him today with paying off our 30-year mortgage in the next 7 years or sooner. Keep in mind that everyone has something they can afford to give. Don’t block your blessings. That is why these tips on how to live on one income regarding tithes and offerings are very important.
My rich dad gave money as well as education. He believed in tithing. “If you want something, you have to give.”Robert T. Kiyosaki the author of Rich Dad Poor Dad.
#9 Tip – Spending
While living on one income you must be careful with your spending. You must focus on the necessary, use of coupons and any other cost-saving measure. I like to do my food shopping online. It helps me stay on budget because I can see the total before I hit the purchase button. I can remove or add items to stay on budget. The biggest thing is I can avoid impulse buying. Also, I take advantage of any discount events offered by my favorite stores. My grocery store has many discounts and a cash-back program to help me save money. However, sometimes you just have to say no to some expenses.
Sometimes you may have to say no to expensive events or delay them until you can save up to enjoy them without it being a burden. Sometimes you may have to say no to an expensive vacation or opt for a low-cost substitute. In a pinch, staycations can be fun. There may be many local places to visit where you can act like an out-of-town tourist. Coming from New York there were many tourists type places to visit. Finally, use rewards cards whenever possible to save on the cost of travel and other expenses.
When spending on clothing and household items there are many discount stores, thrift shops, and websites to purchase at low cost or barter. Check online for your local thrift shops. Not only will you be supporting your community, but I also found that thrift shopping is an adventure. Goodwill and the Salvation Army are great places to purchase low-cost items as well. Finally, develop a network of friends to barter or trade with. Also, seek out websites that allow you to barter, trade, or offer free stuff such as https://www.freecycle.org/, https://www.barteronly.com/, https://www.rehashclothes.com/ to name a few.
Can I live off one income?
Trying to live on one income in a two-income world may be difficult to accomplish. Housing, food, and essential expenses may make this difficult for most households. Especially, if you are currently living paycheck to paycheck a month. However, it can be done. It starts with a plan of action and a full understanding of your financial situation. Try a test drive for a month or two. This dry run may help you decide or at least shed light on what needs to be done for this to be possible.
How to live off one paycheck a month Recap. Here are 10 Do Now Tips for living on one Income to get you started.
- Set up a new budget with just the one income
- Have an emergency fund of 6 to 12 months of living expenses
- Cut non-essential costs immediately
- Pay down or eliminate all debt
- Negotiate expenses
- Make giving a part of your budgeting
- Review your tax withholding
- Spend less wherever possible
- Create a plan to handle various financial emergencies and non-emergencies
- Try a dry run to test the waters if you are not sure
I hope you found these tips on how to live on one income helpful.
Here are additional resources:
Let’s Budget, Spend, and Live!