Building multiple income streams is a brilliant way to have a financially stable life. However, in a situation where there’s only one source of income in a family, it becomes relatively difficult to thrive financially.
Nonetheless, once you know how to live on one income tactically, you would be able to pull through even if your financial situation doesn’t seem favorable at first.
Being able to sustain a family, achieve financial goals, and save money on one income, isn’t easy. But if you correctly apply the principles and strategies you can learn in this post, you can pull this off.
What Is Single Income?
While many people may have misconceptions about what a single income is, a single income simply means a single paycheck or a situation where a family has to survive on a single source of income.
For instance, if someone says that a family lives on a single income, that family earns a single paycheck rather than two paychecks coming from both the husband and the wife.
Is It Possible To Live Off One Income?
Living on one income could prove difficult, but it remains a feasible feat. Anyone can live off one income, provided the right strategies are being used to manage finance efficiently.
Living off one income can only become impossible when you lack the right tactics to leverage your income without getting entrapped in a financial crisis.
Benefits Of Living On One Income
Knowing how to live on one income comes with some benefits, especially when you are not earning a large chunk of money at the end of each month.
To start with, you must understand being able to live on a single income means you need to be acquainted with certain strategies or great tips that will enable you to manage your income without running into debt or damaging your financial status.
Being able to live on a single income; here are some of the benefits you’d experience afterward:
- You’d be able to avoid unnecessary debt
- You’d have control over your spending habits
- You’d get used to planning your finance successfully
- You’d get used to creating a budget and sticking to it
- Knowing how to save money won’t be difficult
- You’d be able to account for every cent that leaves your pocket
- You’d be able to maintain your financial status without blowing things out of proportion
7 Strategies That Can Help You Live On One Income
Living on a single income in a two income world may prove challenging, yet it’s practicable. So many American families are surviving on one income, and they have been able to pull this off successfully because of the financial strategies they constantly apply to their income.
Here are 7 simple tactics you can leverage to live on one income:
1. Build An Emergency Fund
One of the significant problems you’d face while trying to sustain your financial status is emergency expenses. Imagine spending money on what you never planned for. That would be heartbreaking, especially when there isn’t enough money to go around. To avoid this issue, as someone living on one income, you must have an emergency fund.
So when budgeting your monthly income, you should include an emergency fund in the budget. It doesn’t have to be a lot of money, and you only need to constantly save a particular amount of money in the emergency fund for as long as possible.
There’s nothing to worry about if you don’t know how to build an emergency fund. I have written a comprehensive guide that will walk you through the basic and practical steps of building an emergency fund successfully.
2. Set A New Budget
Another thing a family living on one income can do to save their finance is set a new budget whenever their cash flow increases or decreases.
For instance, if you used to earn $10,000 every month, and unfortunately, your employer had to cut your paycheck to $8,500 due to some unavoidable reasons; this means you would have to create a new budget that suits your monthly cash flow.
The necessary adjustments you’d make to your budget are very important because it helps you not be caught off guard by your expenses. With a new budget in place, it means you are prepared to cover the month’s expenses as they come.
3. Start Cutting Costs Early
Knowing how to successfully live on one income would require you to cut costs early. What this means is, having realized how much you are to earn per month, you would have a better understanding of the spending cuts you need to make.
You should create a list of your monthly expenses for more clarity, and don’t leave anything out of the list. Once you have your list of monthly expenses, circle anything you know for sure you can do without.
This could mean canceling your gym classes, expensive cable TV packages, or even relocating to a less expensive apartment. The main idea is to cut down on your expenses by not spending a dime on what you don’t really need.
4. Pay Down Debt
One significant thing that can break your budget is the high-interest debt on credit cards. This can make it impossible or very difficult for you to live on a single income even if you have all the knowledge in the world on how to live on one income.
If you are looking forward to knowing how to live on one income with debt, you must understand that you can’t accumulate or keep debt forever. Make it one of your financial goals to pay down your debt.
Start by calculating whatever you are owing and figure out how long it would take for you to pay off completely. When creating your budget, you should include the debt you have to pay. This doesn’t mean you have to use all your money to pay the debt. Pay according to your financial capacity.
In fact, it’s advisable to pay off debt bit by bit, especially as someone living on a single income.
5. Consider Tax Withholding
Sometimes, financial experts advise families who don’t know how to live on one income to look at their income tax withholding to see if it can be adjusted.
By doing this, you can increase your allowances since less money would be taken from your paycheck every month.
However, in a situation where you aren’t sure if your withholding needs some adjustments, you should speak with an expert in tax withholding. Moreover, if withholding changes would impact your net income, make sure you adjust your budget.
6. Spend Time, Not Money
This is just a simple rule that can help you manage and save money. Whenever you have the impulse to go shopping or spend unnecessarily, look for something else to do. Get a hobby. Engage yourself in fun-filled activities that would take your mind off spending.
If you have kids, then that’s fantastic. Devote time to your kids when you are less busy. You’d find more fulfillment in spending time with your kids rather than spending money you didn’t plan for.
7. Devise Methods To Manage Your Finance
In some families, one person manages the family’s finance. However, in some cases, both partners are responsible for looking after the family’s finance. Nevertheless, irrespective of who’s handling the family’s income, the right strategies for managing money should be applied.
As someone who is clueless on how to live on one income, you are expected to devise simple methods or tricks to enable you and your family to thrive financially, even if you aren’t earning a lot of money.
Aside from cutting down your monthly expenses, you can get other thighs to sustain your finance, such as building an emergency fund and automating savings into a secure savings account.
Moreover, you can occasionally consult with a financial planner for more strategies to manage your income and reach your money goals.
Pros And Cons Of Living On One Income
Living on one income Is not the ideal way to attain a picture-perfect life because irrespective of the merits of a single income, there are still some disadvantages to it. This is why you must get acquainted with the main pros and cons of living on a single income.
[Pros]
- Opportunity To Look After Children
When a family survives on one income, it means only one parent is working, while the other parent is opportune to remain at home. Hence, the parent who isn’t working can look after the kids.
So, for instance, if the husband is at work, the wife could be a stay-at-home mom, taking care of the children rather than hiring a nanny or babysitter.
- Resourcefulness
The moment you know for sure that you only have one income to survive, you’d have no choice but to be resourceful with the income you have. You’d be compelled to make the most of your paycheck, rather than believing it’s too small to sustain you and your family for the month.
- Ability To Determine Needs And Wants
Knowing how to live on one income will enable you to identify your needs and wants. That is, in the course of trying to manage your finance, you’d be able to discern what to spend money on and what to ignore. You’d be able to focus on what truly matters.
- One Is Convinced To Make A Working Budget
Whether you earn a ton of money or not, it’s impossible to manage your income efficiently without a budget. You need a budget to determine when and how your hard-earned money would be spent.
So when it comes to living on one income, you’d be totally convinced to make a working budget without feeling pressured to do so. Otherwise, you won’t survive.
[Cons]
- Foregoing Potential Income/Salary
The most common problem you’d have to face when living on a single income is forfeiting your spouse’s potential salary or income.
Originally, if you and your better half were both working paid jobs, two paychecks would be coming into the home every month. But if only one person is working, only one paycheck is being earned.
- Disagreement With One’s Spouse
Couples tend to disagree a lot when there isn’t enough income coming into the home. You and your spouse may constantly have disagreements over overspending habits, investment, savings, and whatnot.
If you find yourself in this situation, you should speak with a professional. Perhaps a seasoned financial planner who would guide you on how to move your financial status to the next level.
- Struggles In Making Ends Meet
As a low-income earner living on one paycheck, you sometimes struggle to pay bills. This is because there isn’t sufficient cash flow to cover all your typical expenses. That is why it’s important to increase your cash flow even as you learn how to live on one income.
Final Thoughts: Living On One Income
If your family has been living on two paychecks for a long time, it would be difficult to adjust to a one-income standard of living. Making all the necessary financial adjustments would be pretty tough because you aren’t used to that kind of living.
Notwithstanding, if at the time you started your family, you had been living on one income, you won’t have to worry about a lot of financial issues. The only thing you should be concerned about is how to continue scaling your finance and maintaining your standard of living as you live on one income.
Another key thing that can help you master how to live on one income is your willingness to not live above your means. Do not incur expenses you won’t be able to handle. Ensure your standard of living is within your financial capacity.
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