How to live on one income? Simple Guide
Today I will be talking about how to live on one income in a two income world.
It is hard to overcome the emotions and the feelings of living with less money.
However, it doesn’t have to be that way. It is easy to thrive when living on one income.
Life is about happiness – not money. Money doesn’t equal happiness.
It doesn’t matter the reason you may have choose or been forced into living on one income.
That isn’t what we are going to discuss today. Life happens.
Living on one income in a two income world may have been what you wanted, or it was thrown upon you. Regardless, you can survive and thrive in your current situation.
So, in the end, you don’t need more money in your life. Just to be purposeful with what money you have.
You can live on one income!
You may be still wondering, so… how do people survive on a single income? We are going to cover that and give you specific ways to living on one income.
Plus, you can find plenty of tips to make it more enjoyable and find success!
Other posts that may interest you:
How to live on one income?
Today, we are going to layout the exact information you need to be successful with living on one income.
You will find the process harder at the beginning, but over time it will become easier and easier.
Whether you want to stay at home parent, a health issue, a forced layoff, or a personal choice, you are going to find tips for living on one income.
Make a budget
All of my posts seem to start with “you need a budget”, but without one, your finances will never improve.
If you’ve been avoiding doing a budget because you think a budget is restrictive, I’m going to tell you that’s the furthest thing from the truth.
A budget is freedom and what you will most likely find from doing one is that you’re going to feel like you got a big, fat raise!
I’ll never forget the first time I did a budget. We had so many leaks in our finances. What I mean by that is that we were making too much money to be as broke as we were.
But the problem was we had no idea where the money was going.
When you first start budgeting, it’s not only a good idea but absolutely necessary to track your spending.
This will give you a clearer picture of where your money is actually going. A great place to start would be to begin writing everything that you spend, down.
After a month, you will begin to see a clear picture. Your bank statements are another excellent resource for finding out where your money went.
When I put everything down on paper, I found money that we didn’t know we had and where the leaks were in our budget.
You’ll be amazed that when you begin to give every dollar/pound a name, you’ll most likely have more money to work with.
Would you like to know how to create a budget, but don’t know where to start? Then see the post below:
Check your habits and track your spending
Always track your spending and be aware of their money routes. If you will not track your spending, your budgeting will not be as efficient as it should be.
Before budgeting for your next month, when you track your last month’s spending, it becomes easy to create a budget and make any changes you need for your next month.
You might agree with me that every purchase we make seems to be very important to us. We are living in a materialistic culture, where much of the attention is given to owning things, even if we don’t need it.
I think you will agree with me on this one that If you want to achieve financial freedom, you have to track your spending and figure out the unnecessary purchases.
It will be easy to figure out your budget when you know, exactly where your money is coming and where it is going. There are a lot of apps to track your expenses but you can do it old school way also.
Take your pen and paper, and start writing down your expenses. This is the best habit you can develop to stay debt-free.
Would you like advice on cutting down your monthly expenses, but don’t know where to start? Then see the post below:
Decide your debt payment
There’re two schools of thought on a debt payment approach.
Whichever option you choose, you start by making minimum payment for all debts.
Then you pick one debt to attack at a time.
In choosing which debt to attack first, you have two options: you either pay down the debt with a high interest rate (the debt avalanche method) or attack the smallest debt, regardless of interest rate (the debt snowball method).
The Debt Avalanche Method
Choosing the debt with the highest interest rate.
This debt payment method will save you more money than the debt snowball method, since you repay the debt with a high interest rate first.
If saving money on interest rates motivates you, go with this method and work your way down from the high interest rate debts.
The Debt Snowball Method
Choosing the smallest debt regardless of interest rates.
This debt payment method plays on our psychology than a monetary gain.
If you have, say, 5 credit cards debts, paying off the smallest debt gives you a sense of victory and achievement early into your debt paying journey.
It may cost you more money than the debt avalanche method, but encouragement from an early win inspires you to continue attacking the remaining debts.
Would you like to learn more about the snowball and avalanche method, then see our posts below:
Set specific financial goals
Having financial goals is great because it keeps you motivated to work towards something you actually want to achieve.
Financial goals are very subjective and not one size fits all. One person’s financial goal might be to become a millionaire by 50, and another person’s goal might be to get out of debt by 30.
It all depends on you and your specific circumstances.
Once you know what your goals are related to your finances, you can start coming up with a plan.
If you are someone who has a lot of debt and wants to pay it off before you turn 30, look at how much you owe. Then, calculate how much you would have to pay every month until you reach 30 to pay it all off.
Sometimes, you may find that you can’t reach those goals in the exact time-frame you set out for yourself.
And that’s ok. In that case, set smaller goals which will ultimately get you to your bigger goals and to where you want to be with your finances.
Want help setting goals? See my post for setting SMART financial goals:
Have an emergency fund
Take some of the stress out of life by building up a solid emergency fund for rainy days.
It’s not a case of if you’ll need that money someday, it’s when.
Boilers break, cars need repairing, jobs don’t work out and unexpected bills can land on your doorstep at any moment. If you’re not financially prepared for these situations, then you can end up resorting to credit cards or loans to help you out. That’s how you end up in serious debt, and it makes an already stressful situation much, much worse.
Work on building up a rainy-day fund that’s enough to cover 3-6 months (or more if you can!) worth of bills and living expenses should you not be able to work for any reason.
Would you like to know how to create a emergency fund, but don’t know where to start? Then see the post below:
Pay your bills on time
I cannot stress the importance of making sure you pay your bills on time. I know there are situations that occur that are sometimes out of our control but being financially savvy and creating good money habits is about avoiding debt and financial trouble.
There are legitimate reasons why you may not be able to pay your bills on time but there are also reasons that just boil down to not making the correct money decisions.
Your bills should come before anything else. That’s why I always recommend paying your bills as soon as you’ve been paid. That way all the important stuff is out of the way and you don’t have to worry about keeping your money back to pay off your bills.
Aligning all your bill payment dates is another really handy tip to ensure that your bills are all getting paid on time. Make sure all your bills have the same payment date or are very close together rather than being spread out across the month.
Negotiate your bills
Unfortunately, you can’t cut them completely but chances are you can lower them. Most people miss this one because they think bills are bills and there’s nothing you can do about them, but that is the farthest thing from the truth.
Start by calling around to make sure you have the best deal.
You can also cut your heating bill by 3% for every degree you move your thermostat.
Many companies offer a discount if you sign up for autopay. Make sure to ask because sometimes they only apply the discount if you ask for it.
We also cut our internet bill in half by asking about their current promotions. This alone saved us £360 this year. Once you start adding up all savings you found on bills, you’ll find several hundred pounds/dollars in savings
Know the difference between want and need
Another important habit to have is the ability to know the difference between a want and a need. Making a poor purchase on a want will give you temporary satisfaction, while buying something that you need will be enjoyed long after and won’t be a straining burden on your finances.
When you’re weighing a purchase, you need to take a look at whether it will add more value to your life, or if it will be a setback in your long-term goals.
That’s not to say that you should never buy something that brings pleasure, but you should always consider what value it adds to your life.
Would you like to know how to complete a no spend month to save money? Then see the post below:
Save save save
This might sound strange but it’s so important to save if you can.
For a long time, we didn’t save any money, partly because we felt that we weren’t in a financial position to be able to do so but also because we just weren’t used to it.
Saving actually felt like a punishment.
In order to save money, you have to have a positive attitude towards it.
You must habitually, purposefully do it otherwise you won’t do it at all. Believe me, I’ve been there.
In the past, the only time I have successfully managed to save was when there was something that I really wanted and my goal was to reach it.
Like the time we needed a bigger house or the time we needed a second car.
Set yourself saving goals, long term ones as well as short term goals. This will make it so much easier for you to save up your money.
Would you like to know more about how you can save money? but don’t know where to start? Then see the posts below:
- Save Money on Utilities – Simple Guide of 20 Tips
- Reduce Your Expenses – Simple Guide!
- Smart grocery shopping tips – Simple Guide!
- 10 Things to Stop Buying to Save Money – Simple Guide to Save Thousands!
- 9 Tips to Save Money – Simple Guide!
- Frugal Living Lifestyle – 11 Habits of Frugal People
- How to Save Money on Online Shopping – 8 Tried and Tested Tips!
- 10 Tips To Save Money On Groceries – Tried And Tested Guide!
- Is The Honey Extension Legit? – Save Money Online While Shopping!
- Reduce Heating Bill – Simple Guide!
- Frugal Habits – Simple Guide!
Have a positive money mindset
A money mindset is the attitude you have towards your financial situation.
If you have a negative mindset and continuously think this is the best you can do and it won’t get any better, then that’s where you’re going to be stuck.
If you always focus on what’s wrong, it’ll be impossible to stay motivated. By changing to a positive money mindset, you’ll start making better choices about your finances.
People who are never broke know that money always comes back to them. Just keep thinking to yourself or saying there’s more where that came from.
Would like to learn more about how implementing a money mindset can help you achieve financial freedom and live a happier life? Then the post below:
Put side-hustle money to one side
I made the decision that any side hustle money was to be put in a separate pot. I’m not what motivated me to do this in the first place but it worked wonders.
Seeing my side-hustle income grow independently made me realise how hard I hard been working to achieve it. It also inspired me to make more.
When the figure didn’t grow much over one month, it would give me a kick up the bottom to find more ways of producing income.
Interested in earning some extra cash through a side hustle? Then see the posts below:
How to live on one income – Final thought
If you want to live off of one income then you need to work out a plan together. If you aren’t on the same page then it will be hard to manage your finances.
Plan out a budget together and discuss what goals you want to accomplish financially and how you will do that.
I hope these steps were helpful. Living on less is completely achievable with a little bit of work and a lot of consistency!