When my husband and I made the decision to live on one income, I was terrified. Not only would I dearly miss getting a paycheck, I honestly wasn’t sure how people survive on a single income.
After floundering for quite a while, we did finally figure out how to live on one income. I want to share those tips for living on a tight budget with you!
Maybe you want to transition to being a stay at home mom (or dad). Or ambitiously plan live on one income so you can save the other. Perhaps you find yourself in a new circ*mstance that requires you to start living on a small budget.
Whatever your reason, these tips will offer you ideas for living on one income in a two income world.
1. Adopt a new mindset
How well you’ll fare in your new ‘one income’ lifestyle greatly depends on your attitude.
True, living on a tight budget requires some creativity and sacrifice.
Realize that some things you’re used to will have to change. But there are still plenty of ways to enjoy life that don’t involve spending money.
It’s important to find some ways to compromise, and let go of some of the things you think you need.
If you’re used to getting manicures at a nail salon, buy a couple of nail polish colors at the drugstore that you love, and get good at polishing your own nails.
Maybe you love to read. Instead of buying books, start using your local library. Most libraries are part of a big system where you can request any book you want. It’s very rare that I can’t gain access to a book I want to read.
If you eat out a lot, find some tasty, quick, inexpensive meals you can make at home.
Related: 10 Easy Cheap Meals That ANYONE Can Make
2. Pay off debt
The more debt you have, the higher your monthly bills will be. And the more money you’ll waste making the banks richer.
The faster you can plug away at paying it down, the sooner you’ll have room in your budget for other things.
I highly recommend Dave Ramsey’s snowball method for debt payoff.
It goes like this:
- Make a list of your debts, in order of smallest debt to largest
- Except for your smallest debt, make minimum payments on all your debts
- Pay as much as you possibly can on your smallest debt, until it’s gone
- Move onto your next smallest debt, paying as much as you can on that, until it’s gone
- Rinse and repeat until you’re debt free
Because you see success so quickly, you will feel inspired to continue your debt payoff journey.
Related: How to Pay Off Debt: 15 Ways to Start Today
3. Know where your money goes
Yep, that means having a budget. It sounds fancy and complicated, but actually it’s not.
It’s just about having a plan for what you’ll spend your money on each month.
Here are the basic steps:
- Calculate your monthly income (your take home pay)
- List your fixed expenses (your regular monthly bills)
- Total those expenses, and subtract them from your monthly income
- Decide what you do with what’s left (assign some money to savings, and as much as you can to debt repayment)
- The amount that remains is for food and entertainment
To find out how to live on a budget, check out:
Budgeting for Beginners: A Step by Step Guide for Getting Started
Sticking to a Budget: 15 Budgeting Tips for Beginners
4. Plan and save for the things you want
A big part of proper money management is planning ahead.
Remember how we talked about adjusting our mindset? This is a big one!
Instead of just buying any old thing you want, start giving some real thought before spending money.
Every dollar matters when you’re living on a tight budget. That’s not a punishment – it’s an opportunity to be more mindful with your resources.
Whether big or small, you need to think, plan, and save before buying something.
If you don’t have the money to comfortably spend, you simply can’t afford it right now.
And that’s okay. You probably will soon forget what it even is you think you wanted!
NOTE: Want to go from reckless spender to organized money manager? You need the Overspending Rescue Plan. It will change the course of your life!
5. Have an emergency fund
You wouldn’t walk a tightrope without a safety net, right?
Then don’t live without an emergency fund!
An emergency fund will give you the peace of mind that you will have the money you need when crappy stuff happens.
Credit cards are not an emergency fund. They will create a cycle of debt that you’ll never be free from.
Before migrating to living on one income, please be sure that you have a couple of months of living expenses saved.
If that’s not possible, aim for at least $3000. And be sure to keep adding to it.
You need a line in your budget for saving money. Before cable, before subscriptions, before fancy phones.
An emergency fund is a non-negotiable.
6. Meal plan
Maybe you’re sick of hearing about meal planning, or maybe you’ve never tried it.
Either way, it is a crucial part of keeping your food expenses low.
It also helps your sanity!
You’ll know exactly what to buy, because you’ll have know exactly what you’ll eat.
Doesn’t that sound like peace of mind?
To learn all about meal planning on a budget, check out this post. It’s the exact system I use to keep our grocery budget under $200 a month.
7. Avoid paying full price
I think I’ve become allergic to paying full price. It’s actually started to feel icky to pay in full, because I’ve realized that I can get pretty much everything I want at a discount.
It just takes a little creativity!
Luckily, with the internet, we can quickly compare prices, and find countless ways to save money.
I have a long list of ideas on the Money Saving Resources page.
Some easy ways to save money are:
- Shopping the clearance racks
- Buying generic or store brand instead of brand name
- Shopping at thrift stores (use these easy hacks to really succeed)
- Buying things used on Craigslist or Facebook
- Using coupons
- Getting cash back using rebate apps like Ibotta and Ebates
Related: How Does Ibotta Work? A Review and Tutorial of My Favorite Cash Back App
8. Get a term life insurance policy
This is critical. It’s actually important both for the ‘breadwinner’ of the family, and for the home caretaker to have term life insurance. (Term, and only term, please!)
You’ll obviously need to replace the income lost if something happens to the sole provider. But the life insurance payout is also often needed for the breadwinner to replace the services that the home caretaker provides, especially if you have kids.
If you’re a single parent, find an adult you trust to handle the life insurance payout, so that your child(ren) will be taken care of. (Minors can’t inherit money.)
Please don’t skip this step!
9. Negotiate lower rates
Did you know that you can call your service provider companies, and ask for a discount?
Things like cable, internet, cell phone carriers, insurance, and credit card interest rates are often somewhat negotiable.
They may adjust your plan to one that costs less, or reward you with a discount if you’ve been a loyal customer.
Also make sure to cancel any subscriptions or memberships you don’t use often, or those you can no longer afford.
Take a look at your bank account or credit card statement to see the little things you’ve forgotten about that are draining your bank account.
Related: Where Does My Money Go? 15 Spending Links Destroying Your Budget
10. Get creative about entertainment
Going to concerts, the movie theater, professional sports games, theme parks, and so on is very expensive.
Find other ways of entertaining yourself or your family that cost next to nothing.
There are plenty of options!
Rent movies from Redbox or your library. Have a game night at home, or attend non-professional sports and concerts.
Related posts:
- Fun Things to Do in the Spring: 70 Ideas for Your Spring Bucket List
- 120 Free and Cheap Summer Activities
- 107 Ideas for your Fall Bucket List
- 75 Winter Bucket List Ideas to Help You Enjoy the Season More
11. Set up your home so you like being there
This was one of the best ways I found for being okay with spending less money.
After many sessions of decluttering, arranging furniture, and organizing simple systems, I got everything just the way I want it.
If you set things up in your house so you enjoy spending time there, you might even start to prefer being there instead of out shopping.
Making your house cute and comfortable does NOT have to cost much (or any) money.
Find creative ways to arrange what you already have, or use or repurpose decor you get from thrift stores, hand-me-downs, garage sales, or the dollar store.
You May Like:
- 10 Easy Tricks to Make Your Living Room More Cozy
- How to Make Your Bedroom Cozy: 19 Easy Tricks
- Declutter Your Home Checklist: 135 Things to Get Rid of to Organize Your Home Fast
- How to Keep Your Home Smelling Good All the Time: 23 Fresh Smelling Home Tips
- Decluttering Questions to Ask Yourself Instead of ‘Does This Spark Joy’
You can do this!
I really hope this post gave you some ideas for how to live well on a small income.
It can definitely be an adjustment when you go from two incomes to one. Try to keep an open mind!
If you can get yourself to start loving saving money as much as you used to love spending it, you’ll be well on your way.
Think of it as a game, not a punishment.
Try to remember why it is you decided to live on one income in the first place. Let that be your motivation when it feels tough.
And if you’re really struggling, here are 21 ways you can earn extra money that don’t involve getting a job!
You May Also Like:
- The Best Personal Finance Books of All Time (when you REALLY want to change your life)
- The 13 Habits of Financially Successful People
- Where to Start When You’re Flat BROKE
- 7 Ways to Pay Your Mortgage Off Early
- 10 Money Myths That Are Keeping You Broke
- 10 Things to Do to Finally Get Control of Your Finances
