8 Tips for Living on One Income
A Two-income household living on a single income is one of the most effective ways to turbocharge debt payoff towards our goal of a more financially free life. The past year we’ve been accustomed to living on the lower of our two incomes and start using the higher of our two incomes to payoff debt. This method will rapidly accelerate our payoff rate. I’m aware that living on one income is not possible for everyone, but maybe the tips outlined below may help you towards being in a position to do so:
Communicate Often
Communicating early and often is key. Especially as you both take the first step, you are both accustomed to living on both of your incomes. Reducing that 10% alone is a drastic lifestyle change, let alone 50%. It will be important to check in with each other to make sure both of your thoughts and feelings are on the same page.
Have an Emergency Fund
Having an emergency fund enough to cover six to nine months of living expenses will shield you from unforeseen expenses that may derail your plans. Essentially medical costs or an unexpected home or vehicle repair.
Set a New Budget
Make necessary adjustments and figure out a new monthly budget before you downsize to one paycheck. By closely scrutinizing our spending habits for the past year, we were able to get a good look at where we could cut costs.
Cut Costs Early
Once we figured out our new budget, we had a better idea of what spending cuts we needed to make. Since we don’t live in the nicest neighborhood and live in a smaller home, downsizing wouldn’t have much of an impact. We do however, live in a pedestrian friendly neighborhood and will explore the option to sell our second car and carpool with each other to work. This is something we’ve been doing actively for months that helped prepare us for this decision.
Combine checking account
Unpopular opinion, but I prefer managing our finances with a joint checking account. It’s easier for me to track finances from an efficiency standpoint and even though I primarily handle money matters in our household, it’s important to my integrity that my wife has transparency and easy access to our funds.
Use Time Efficiently
There is a wealth of information out there from Google, TikTok, and YouTube. Learn from those resources and use time instead of money to prepare meals instead of takeout, DIY on home repairs/improvements, perform your own routine maintenance on your vehicles. Knowing these useful life skills can save you money and lead you towards becoming self-sufficient.
Embrace Minimalism
Minimalism helps you get to debt freedom and financial independence sooner. Minimizing your lifestyle, lowers your cost of living, and in turn reduces the amount needed to retire comfortably. My favorite outcome of minimalism in our household is less cleaning time, less maintenance of stuff, and less laundry to fold with capsule wardrobe. Simplifying our life gave us more time to do the things we enjoy.
Keep Your Eyes on the Prize
Know that this doesn’t have to be permanent. An anonymous quote that I always seem to fall back on when I find myself a passenger on the struggle bus, “Live a few years like most people won’t, so that you can spend the rest of your life like most people can’t.”