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.
Prioritizing
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.
This is a very timely post for me. We’ll know in about a week or so if my husband got a job in another state and we may wind up becoming a one income family, at least temporarily. I’m a planner so this is giving me some things to think about.
Are you excited about the potential move? Moves can be fun :)
Excellent topic. I think a lot of people would like to live off one income for many reasons like raising a family, taking a hobby to the next level, or transitioning to a different lifestyle (ie. retirement, etc.). Organization and prioritizing is really important in order to achieve this goal.
I think it could really be beneficial for a lot of people.
I think the ability to live off one income is great. I think it holds you (and your family) more accountable when making purchasing decisions.
It can certainly make you stop and think more, I imagine. That does bring up a good point though, it also may make you more aware of risk.
We don’t like on one income per se, we use part of my income to cover some stuff and part of his income to pay some bills. But put together I think we probably live on one income. We follow targeted savings, zero based budget. So we live with whatever hits our checking account after funding all our goals. I would like to stay at home for some time when we start a family. I have been meaning to do a budget without my income, but have not done that yet.
It’d be interesting to see what changes in your budget when you go from how you do things now to a one-income budget.
There are always good ways to manage things. It’s in our own hands on what way to choose and how are we going to do it. So, it’s about proper weighing and management of things and correct decision making.
Yeah it is a matter of planning and prioritizing.
That’s cool that you developed your own app. It sounds hard and complicated.
It actually wasn’t (except for figuring out the equations for the debt snowball; turns out my algebra teacher was right that I would use that someday). But I had someone else code it for me.
We’ve lived on one salary, but always had other sources of income ie real estate, dividends, capital gains (losses :( ). We always live beneath our means!!!
Yay for multiple sources of income! (And living beneath your means, too, of course!)
Excellent post, and timely for me too. Interesting that you mentioned that being home helps free up cash. (Really?! How great!) Most of the posts I’ve read say hold on to all cash flows and maximize your income for as long as possible (no matter what the cost – LOL)
Well, it’s living on one income — while having more than one income — that can free up cash.