How to afford living on one income

Living on one income in 2021

Living on one income has been somewhat more normal than before nowadays. When the pandemic first started, alot of people had to work from home or were laid off.

Companies had to close, and unless you were an essential worker, you probably were the many that became unemployed. 

On the other hand, maybe you started a family, it was in the family’s better interest for one person to work.

The other has to stay home to support and take care of the family. And all of these and many reasons lead us to living on one income. 

Living Wage Calculator

Have you ever thought about the amount of income you need to support your family? Even if you think you’re far from what you need to earn, it’s just interesting to know what you should be doing to support your family.

After looking through some statistics, I came across the living wage calculator. When I first checked it out, of course, still far from it, but when I’m working on building my income, I know where I need to be.

Below is an example of what I should be making for my county residence in Connecticut.

Making ends meet and saving money on one income is a challenge, but I believe these tips will help you navigate to success. 

You will learn about the main things you will need to monitor for your budget—additional tips for managing living on one income. 

Revise your Budget

To control your expenses, you have to start with a budget. Budgeting tells your money where to go and helps you understand what you can afford for spending. Every time changes, it’s good to do a revised budget. Recalculate the income versus expenses. If you are someone that income varies from paycheck to paycheck budget in that order. 

Paycheck to Paycheck Budget

In my opinion, a Paycheck to Paycheck budget is best for those living on one income. It’s easier to monitor and review expenses on the frequency of your paycheck.

Use this time to review also with your partner. Doing two budgeting sessions will create more communication and remind you of your goals.

Doing a monthly budget, halfway through the month, you might forget those goals and overspend.

One income is minimal, so you have to designate every dollar. That is why I’m also recommending a zero-based budget as well. 

So you will start your paycheck to paycheck budget and make sure every dollar has a place. Divide in income into these main sections, fixed, variable, savings, and housing. 

You can try my recommend model 30% Fixed, 30% Variable, 25% Housing and 15% Savings. My paycheck by paycheck budgeting example is shown below with a $2000 Bi-weekly paycheck.

Another model to try that has been used to divide your income is: 50/30/20

How to use the 50/30/20 rule in your budget

As a couple with one income, it is smarter to designate a personal spending fund for each person. If your budget allows it make sure this comes from the variable section.

Once that Allowance is gone, it’s gone. Whatever you choose to spend it on is your choice. Personal Allowance gives more freedom in a relationship with one income. 

Paycheck to Paycheck Budget Template

Start with a template to help you with your budget. I’ve already created one for you. The Paycheck Budget Template will be on its way to your inbox. Join my email list and get plenty of free templates and tips to help you on your financial journey.

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Now you have balanced your budget. Next, it’s time to pay bills. To make every dollar stretch using the half payment method will allow more flexibility between pay cycles.

The Half Payment method splits all of your bills in half for each pay cycle to fulfill the full payment on its due date.

I’ve gone over each of these budgeting methods in more detail in the articles below

How to use the Half Payment Method

make sure all your budgets are zero based…

How to use the Zero-based budgeting method

How to use the cash envelope system without cash

Cutting down Expenses

You might notice especially if you’re transitioning from two incomes to one; your expenses still exceed your income.  Before your bill matches what you bought in now that the income is lower, we have to eliminate some expenses.

Sounds easier said than done right? Not really.

When I come across a hard task, it’s easier for me to approach it in steps. Luckily cutting down expenses can be done strategically as well.

How to cut down expenses

  1. Write a list of all your monthly bills
  2. Highlight all the bills that are needs one color and wants the other color
  3. Start with the “want” expenses, see if you can cut them completely or lower the amount
  4. Next the tough part, the “Need” expenses, see how you can lower these expenses
  5. Make a goal to lower one expense each month

Saving money ideas for cutting back

  • If eliminating say a cable bill for instance is not doable, see if you can change the provider for a lower price.
  • Most times when they are aware you are trying to switch carriers they start to offer more deals. 
  • What about your utilities? Could changing the supplier help? 
  • How about that cell phone bill? Can you stop your subscription and opt for a prepaid plan?
  • Is it possible to pause on that Gym membership and work out at home or outdoors?

When you’re trying to save, there are things not to buy when your income is limited. You don’t want your bills to extend past the recommended percentages discussed previously. In my budgeting model, only 30% accounts for fixed bills, including necessary monthly bills

Saving Money

Saving money is when you finally get to put funds aside besides just paying bills. Getting in the routine of paying yourself, setting up an emergency fund, saving for retirement, saving for college.

There are a lot of reasons to save. The one thing to remember is that it’s money for you and your family.

So how much should you really be saving every month?

Start where you can and try to get to at least 20% Living on one income. It feels like it’s hard to get to this part, but starting is the first step. When I did have the motivation to save, I tried a saving money challenge. Don’t wait until you feel ready to save; put something aside now.

Living on one income if there’s an Emergency the only source of income is affected. You absolutely need to have an emergency fund separate from your savings account.

I recommended as Dave Ramsey mentions to start building this first, your $1,000 Emergency fund. When you have this fund you will feel more secure and reduce anxiety.

Communicate with your partner and make it clear what is an Emergency, not a new, the car needs to be fixed and that’s your only means to work…yes.

I would think of it as any Emergency that would undoubtedly affect your income. Everything else you make a plan to save. 

Keeping Track of Your Expenses

Creating a budget is one thing, keeping track is another. It’s the practice of logging every transaction and monitoring what goes out and comes in.

There are times when you might get a surprise charge and you wish you would notice it sooner.

Keeping track helps you catch these so you can dispute them at that time. Also, knowing how much money you have throughout the month in case you have to make adjustments.  

Living within your Means

  • Before you make a purchase be honest with yourself and ask…
  • Can I really afford this?
  • Sure you can get a car loan but can you afford the payments?

You can get approved for a credit card but can you afford to keep up with the credit payments?

Don’t go more into debt, focus on saving and getting rid of your existing debt first. A good practice is to pay with cash instead of credit. If you don’t have the cash you can afford it. 

Embrace Minimalism 

Minimalism is the practice of living with less. Living with less in all areas, fewer expenses, rid of debt, having fewer material things. 

Clothes, kitchen appliances, electronics, and I’m sure there’s more to list. Getting rid of excess stuff to live a life based on experience instead of things.

It starts with getting rid of all the clutter and unnecessary stuff.  If it’s something you haven’t used in the last 90 days, it’s most likely just taking up space.

Most of these I would try to resell on Offerup or Poshmark (clothes). Use that extra income to your savings. Once you get used to living with less, you might have fewer urges to buy more, which helps you save money.

Side Hustles & Odd Jobs

After you have cut your expenses, embrace living on less there’s still that extra wiggle room you need for saving more money.

Most periods of the year might have higher expectations of spending than most, take into account Christmas. I can easily spend $1,000 on Christmas, which is more than my rent if I might add.

In the summer, there are all these extracurricular activities, the kids are home, so of course, more groceries. Imagine how many small fires you can knock out with some extra income. This is where side hustles come in.

We all have things that we are good at and can make extra money from. You can sell crafts, make deliveries, babysit for friends, and the list can go on and on. Try to find other ways to add to your monthly income by doing side jobs. 

Use Coupons when you can

I know using coupons is time-consuming, but we cross this bridge and makeover to the discount side. If it’s one thing I learned about being broke and having a child, coupons were inevitable.

I used to think that cutting coupons was something that I didn’t mean to do. When the expenses grew bigger, I knew I had to cut back on my spending. After researching how to coupon and using strategies to save more money, I start to fall in love with it.

Now I’m what you would call a Coupon Expert, and seeing all of the free stuff I was able to get made me think why I should have tried this sooner.

Suppose you want to save on your grocery bills or other household expenses who absolutely need to coupon. I’ve often gone on a shopping spree with coupons and walked out of the store paying next to nothing.

Shop used or thrift 

When you’re living on one income, new is not always best. Suppose you want to make your money stretch try opting for used items. Try finding a brand new couch for less than $1,000 these days—large purchases like furniture you can find online on eBay or Craigslist for used items.

Shop smart when buying from a seller online. Always read reviews and terms of the return policy. If you’re doing in-person transactions, bring a receipt book for signing and a witness.

Check out the product in its entirety and take pictures if needed. Did you ever shop in a clothing store that didn’t tempt you to break your budget? My new found love of clothing shopping has been at thrift stores.

Shopping at a thrift shop, even online like on Thredup really gives me more options for my money. Walking in a store like these can be sort of like a scavenger hunt. You have to really look at the quality before you buy. 

Let’s wrap things up…

These are the tips that we already discuss for living on one income:

  1. Revise your Budget to One Income
  2. Maintain a Paycheck to Paycheck Budget
  3. Cut back on Expenses
  4. Start to Save for an Emergency Fund
  5. Keep track of your expenses
  6. Live within your means
  7. Embrace Minimalism
  8. Earn extra income with Side Hustles
  9. Use coupons
  10. Shop used or at Thrift Stores

Live with Confidence 

Yes, you might sometimes be struggling, but there is always a silver lining. Even though you have one income, it could be worse. Some people are unemployed and are in harder positions.

So maybe you can’t go on lavish vacations or drive fancy cars for the moment. You are doing what is best for your family.

If you stick to the tips, I shared above, like revising your budget paycheck to paycheck, save for Emergency funds, and cut down on your expenses. You will succeed.

After practicing all of the tips, you will be in a better financial situation than most with two incomes. 

If you’re an expert reader …

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