Living on One Income
Have you ever thought about living on one income, or are you currently doing so? Of course, many people don’t have a choice about whether or not to do so — either they’re single, a single parent, or one spouse is unemployed.
But if you do have a choice about it, living on one income can be a great way to improve your financial life. It can be a way for one earner to stay at home with the kids, to make sure you have enough to live on while you’re working on some passive income ideas, or to build up savings or retirement funds.
In other words, much like paying off debt, living on one income can free up a bunch of cash — cash that you can use for anything you like.
While my husband and I keep separate finances, once we get our house paid off I intend to start living off just the income from my side business (this blog + my debt snowball app). That’ll be a tiny bit like living on one income for me. I’ve gotten used to having that as extra money instead of just making sure that I live on one paycheck that it’ll be a switch.
Living on one income makes prioritizing even more important. When you’ve got multiple incomes (or even just multiple income streams, you have more options, but if you’re down to just one you’ve really got to think long-term to make sure that all of your bases are covered. These areas are important for anyone to think about, but they’re absolutely critical if you’re a one-income family.
- Emergency funds
- Debt reduction
- Having adequate insurance
- Funding retirement
- Meeting your day-to-day obligations
- Reaching your other financial goals
Take the time to think things through, then track spending and create a plan to make it work. Remember, you can always adjust your plan along the way — especially if you do a trial run first.