Live on One Income

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Believe it or not, it is possible for a couple to live on the earnings of only one income. Doing so is not as difficult as you think. Below are some tips and some information to help you decide if one income is right for you.

Steps

  1. Prepare in advance if possible. You should try to be prepared for having to live on just one income. Set aside an emergency fund and only use it for emergencies, and craving pizza is not an emergency. Think and research how you can cover the cost of appropriate life or disability insurance, and if required health insurance for the whole family. Try to prepare for these changes yourself, using the internet and free literature from your local library. If you have the resources and need a little extra advice consider a financial advisor, but they can be quite expensive and usually make commission on products they sell you.
  2. Be aware of the stark fact that working costs money. Yes, you make money by doing it, but you're not netting as much as you think you are. There are travel costs (commute, bus, carpool), lunch costs, that cup of coffee on your way to work every morning, and maybe even childcare. There are a number of different statistics, but working can cost you up to 30 percent of your wage just to go to work, and definitely more if you need childcare.
  3. Realize that when one person is home, it costs less for them both to live. When two people work all day they are tired, and rightfully so. There are many things they do not have the energy to do themselves and pay others to do for them. But when one person is home they have time to make dinner. They have time to mow the lawn, clean the house, wash the windows, iron the laundry, and walk the dog. Many of the things dual income earners pay others to do, can be done at home for much less, and usually done better. Commonly it becomes cheaper for the person still working to keep working. The person still at home can make lunches, make coffee in the morning, and provide that needed childcare.
  4. Only use one car. Many dual working couples have two cars, because they commute to two different parts of the city. But if one person is home, they no longer need the car during the day. That halves your car payments, car insurance, gas, maintenance, car washes, etc. The person home during the day can go grocery shopping in the evening using the only car, or maybe you live close enough to walk to a grocery store.
  5. Move to a less expensive house/apartment. With one person home all day, a smaller home can seem larger when it is kept clean and organized. Also you can move closer to the one income earners workplace, shortening their drive to work, lowering gas costs, and decreasing commute stress. Maybe even move closer to that grocery store.
  6. Examine your budget. Establish a baseline budget by examining your previous debit and credit card statements, bills, and rent/mortgage payments. Can you cover these costs with only 1 income? Ask yourself what can you truly afford. You must be honest with yourself. If you can cover all your basic expenses with only $2 left over, you're setting yourself up for credit cards charges and loans.
  7. Resist the urge to charge. Even if you have hardships when living on less, fight the temptation of using credit to make up the difference. If you have difficulty of paying monthly bills, it will be even harder when you add the interest charges and recurring monthly payments to that amount.
  8. Look into tax savings. "Dependent" spouses (read "no income") come with tax benefits. A dependent spouse may be allowed to transfer their basic tax credits to the earning spouse, making the one income go that much farther. Do research on your own countries tax laws.
  9. Earn from home. Many people who do not work, earn some money. A person who is home all day can earn a small income by doing odd jobs around their neighborhood. All those things mentioned in step two that dual income earners pay someone else to do? You can be that someone else. Maybe mow your neighbor's lawn? Or walk their dog? Or take care of their children one or two days a week. Many people turn their hobbies into small earnings through websites such as eBay and Etsy.
  10. Don't forget retirement. Even thought your income probably was cut significantly, it's always smart to plan for the future. Use the internet and resources from your local library to determine the best investments for your situation. Doing this research will ultimately lead to being more informed and intelligent about any investments you can make.

Video

Tips

  • It seems scary and you're liable to worry "How will we ever live on one income"?. You will, so don't worry. You will make the necessary decisions to make it work.
  • Just jump! Just decide you want to do more with less, to pay less taxes, and drive less.

Warnings

  • If you do it right, your grocery bill should increase dramatically (which can be scary) but many of your other bills will decrease. 
  • In an effort to leave the house many people head for the mall/outlet/grocery store. Avoid this trap. This results in money spending. You are trying to decrease your expenditures, not increase them. Do free things outside, like visit parks, take river walks, and visit friends. Take up photography using your digital camera.
  • There will be sacrifices you have to make. There will be less take out, date night, and fresh from the dry cleaners laundry. You may have to lower your thermostat and wear a sweater in the winter. It's not a walk in the park, but it will be easier then you think.
  • Volunteer, but somewhere close to your home. You don't want to have the expenses of going to work (driving, lunches, coffee) without the benefits of getting paid.
  • Make sure to go outside. When you're home all day it can be easy to fall into the trap of not leaving the house, but that will just make you unsatisfied with being at home. Also be careful not to assume that all your self worth is tied up in good housekeeping; that is an unrealistic and unfair expectation, especially if you enjoyed working outside the home.

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