How to Live on a Single Income

I know a lot of people who were asking if it’s possible to live on a single income before the proverbial excrement hit the rotary device, economically speaking. I imagine there are a great many people who are worried about losing their job and are now asking themselves if their household can live on one income if that day should ever come. Well, it can be done, but it takes planning as well as the right lifestyle and temperament to pull it off.

The key to living on a single income is living below your means. Frugality and a debt free lifestyle will make the single income family a reality. I happen to know this first hand. Five years ago, my wife left the work force and gave birth to our first daughter. We had discussed this decision long before having children, and we felt very strongly that having one of us home in the formative years of our child’s life was something we really wanted. The only problem was we hadn’t really planned for a sudden drop in income, much less another mouth to feed.

I thought I made a good salary and I thought it would be no problem. I soon learned that a good salary alone doesn’t make life easy. We found ourselves living on a single income, in a new home with old debts. Car loans, student loans and a $7,000 credit card balance. In fact, we had over $12,000 in “bad” debt (not counting student loans or mortgage). While we were able to live on a single income and get out of debt, but I would strongly recommend eliminating debt before eliminating an income. In the end we’ve had to do a lot of simplifying and sacrificing to pull this off.

“Kill your television” I see these bumper stickers every so often, and it makes me giggle. Of course, the people with the bumper sticker aren’t advocating pulling the plug on the idiot box to save money, but the fact remains that it is a costly distraction. Electricity use aside, most people I know have cable or satellite, high speed Internet and VOIP. We never actually cut the cable out of our lives, but if we had we certainly could have saved over $1,000 a year. We chose not to mostly because having high speed Internet allows me to work from home. Even if you don’t pull the plug entirely, there are other options. Many cable companies now offer some “light” form of high speed Internet access that is cheaper and slower than it’s costly counterpart, but still light years ahead of dial up. Shopping around is a good compromise to going cold turkey.

Cut the cord on wireless: When I first got my present job, I signed up for cell phone service with one of the big carriers. This was stupid. I only needed it for emergencies, and I was locked into a 3-year contract at $85 a month for something I rarely used. After that contract expired (it was too costly to cancel), I switched to a pay as you go service. For about $6 a month I have service that suits my needs.

Forget about designer – skip “new” altogether: Buying second-hand clothes can save a bundle. Let’s face it, most of the cost of clothing is the brand name anyway. I’m not saying you have to go about looking like Jed Clampett from The Beverly Hillbillies, but being thrifty (especially in your casual wear) can certainly go along way in keeping your costs down. If you can’t do without new clothing, consider asking for gift cards and treat yourself to a splurge once in a while.

Clip it, Clip it good: Sorry for the Devo-like heading, but I needed your attention: Clip Coupons. It never ceases to amaze me how many people don’t bother with coupons when grocery shopping. It’s not easy and certainly not most people’s idea of a good time, but my wife routinely saves over $30 per week on our grocery bill, sometimes twice as much. The key is planning meals for the week around what’s on sale and what coupons are available. It takes about an hour on a Sunday morning, but we think it’s worth every penny.

Housing: Don’t buy more house than you can afford. That was pretty obvious, wasn’t it? But many people don’t factor in the cost of living that goes along with a house. Taxes and heating are two of the biggest costs associated with a house that many people overlook. I have a 50 minute commute to work. Many of the people I work with think that’s crazy, but I don’t mind. I get time to myself, and time to unwind after a crazy day at work. I also get a lot more house for my money, since I live out in the “country” and housing prices never got as inflated as they did closer to the urban centers. It also helps that the average income of my town is much less than mine. If I lived closer to work, where the average income is much higher, my salary wouldn’t go nearly as far.

Health costs: Health costs, like education costs, are becoming a bigger problem with every passing year. One thing you can do to limit some of the bite is make use of your employers Flexible Spending Account (FSA). FSAs allow you to have a set amount deducted from your paycheck each pay period before taxes, just like a 401(k). Instead of investing the money though, it goes into an account. When you have a co pay for a Dr’s visit, or just about any other out of pocket health related cost, you can use that tax-free money to pay for it. If your employer doesn’t offer it, pester them until they do.

Income tax: This is one of those areas where a single income by itself actually helps. The more dependents you have, the less you pay. Plus, if those dependents are children , you get a tax credit as well. But one of the biggest moves you can make to lower your income tax bill is to enroll in a 401(k), 403(b), IRA or SEP IRA plan. The contributions you make today are tax free and are removed from your paycheck before state and federal taxes are applied, thus lessening your taxable income. It’s the only way to truly pay yourself first. But the result is twofold: 1) Save for retirement, 2) lowers your tax bill today.

Living on a single income takes determination and planning. It means setting priorities. You need to eliminate as much debt as you can to free up as much of your monthly cash flow as possible. You need to have a clear plan for when and how you can afford to buy the things you consider necessary. In the end though, these are just smart financial moves regardless of your income.

This entry was posted in Frugal, Personal Finance, Saving Money, Shopping, Work and tagged , , , , , , , , , , . Bookmark the permalink.

11 Responses to How to Live on a Single Income

  1. Alice Kramer says:

    Living on one income can happen and you can be successful. What many folks don’t think about is what you are not spending if there is a stay at home parent. There is no day care cost. You can drive a junker and you are not gassing it up every 2-3 days. I know stay at home moms often have a “uniform” which is cosiderably less expensive that “work” clothes. A stay at home parent can shop things like insurance, the end caps at Target and the like. Cutting costs is a job and a stay at home parent can do it very well, they have the time. Garage sales and thrift stores are very affordable and can replace the mall. It really is about being conscious about what you spend and where. Thanks for the helpful tips.

  2. Monkey Mama says:

    What strikes me is I know so many people who “wish they could stay home with their kids” who make considerably more gross than us (we live on one income) but the more you talk to them the more sometimes I feel like we make more money. Once you consider tax savings, daycare, working/commute costs, etc. we actually net more cash. & since we don’t have debt, our lifestyle surpasses theirs in many regards. Even though many of them make like $40k more a year. Seriously!

    Of course, this will only be true in the early years of daycare. But once the daycare years are over my spouse will return to work.

    Taxes are another HUGE factor, particularly where we live with high state income taxes. On one income we have pretty much avoided income taxes for about 3-4 years, and last year we maybe paid $1k. Our peers who make six figures pay 5 figures in income taxes. I make a good wage, but the tax code favors our home ownership and kids.

  3. Alain Theriault says:

    With a single income you need to pay more attention to your expenses like the ones you listed. Income tax is also great for single income.

    Also like Alice Kramer said, you don’t need a fancy car and you probably won’t gas up as often.

    Good tips as always!

  4. Marie says:

    I think when most people think we can’t afford it they don’t realize that you can live as a one car family, cell phones aren’t necessary, and to trash the cable can give you a lot of breathing room in your budget to stay at home with your children. But when people tell me I’m lucky to stay home it pisses me off – we made the tradeoffs and I’m sacrificing retirement income later on because I value my children that much. Change your standard of living definitions and possibilities open up.

  5. familyof8 says:

    It IS absolutely possible to live on one income. Our household is doing it 🙂 As the SAHP I am responsible for using our finances wisely and finding those great deals that are out there to be found on food, clothing, etc… I LOVE a bargain! Our kids are dressed in designer clothes that I got for cheep either at a thrift store or through freecycle. We use cloth diapers for the babies which helps. It absolutely IS do-able if you want to! 🙂

  6. rob says:

    I think there are some good points and anyone who values owning a house as a #1 priority, it makes sense. Otherwise, maybe the author shouldnt be living in a house if he’s got to cut things out of his life so dramatcally.

  7. Joe Morgan says:


    I didn’t have to cut things so dramatically to afford my house. I had to do so to afford my house WITH the level of debt I had accumulated AND because my wife left the workforce.

    Since we have paid off our debt, we have not had to be so draconian in our lifestyle. My main point in this article was that to live on a single income comfortably, you really need to be debt free and live below your means. It’s something we should all strive to do, but becomes essential on a single income, regardless of whether you own or rent your place of residence.

  8. maat55 says:

    I’m a big believer in living on one income at all times. This income does not have to fund retirement, just bottomline living expenses. The other income can be for consumer extra’s and investing. This plan allows for safety from loosing one income and building wealth.

  9. Joe Morgan says:

    @ maat55 ,

    That’s our plan too, once the kids are off to school and my wife goes back to work. We’re able to maintain our lifestyle, avoid “bad” debt and fund our emergency savings on my salary, but we really don’t have anything left over for investing (aside from 401(k)). I’m learning all I can about investing and testing various methods and approaches in free online simulators with the goal of knowing what I’m doing by the time we become a 2 income household!

  10. Carol says:

    Well, I have mixed feeling on this one because we have been a one-income family and now the one income is gone (auto industry). So it is easy to regret not having 2 incomes. But, I will say that living on one income has forced us to make life-style and money choices that have put us in a better position than we would be if we had done like a lot of2 income couples and lived up to the hilt. We are still in the same house that we purchased when my husband only made around 40k, even though his income more than doubled over the years. Because he had a larger income, I was able to work part-time instead of full-time.

    So we will trust the Lord day-by-day and soldier on, which is really what we’ve always done.

    By the way, remember child care costs don’t always end with daycare. What about after school when the children are young? Summer vacation? Around here (Michigan) many summer camps were charging $100-$200 per week per child. I know, because many of my working friends tried to treat me as a free summer counselor because I was at home with my kids!

  11. Jen says:

    I quit my job earlier this year to stay at home with our little girl. We were able to make the switch to a one salary household by supplementing it with income we get from our online business. We started our business last year in preparation for the arrival of our daughter.

Leave a Reply

Your email address will not be published. Required fields are marked *