How to Manage Your Finances On One Income

When you look at your family’s life plan, do you think there’s a chance either you or your spouse will want to pause your career to raise children, care for aging parents, go back to school, or pursue a lifelong dream? Perhaps you’ve considered it but thought that surviving on one income would be impossible? Nearly 36% of two-parent families with children live on one income, though, so it’s definitely doable. With a careful approach to managing your household finances with only one income, you can make the dream of one spouse staying home into a firm, well-planned reality.

Plan Ahead

If you think one spouse is going to want to stay at home at some point in their working life, make choices that give your family financial flexibility. The most important choice is what housing you will live in. Choosing a modest home with a corresponding modest house payment or rent amount keeps your monthly obligations manageable. Modest homes usually have lower utility costs, which will also save you money. Also, choose modest cars, and buy in cash if at all possible so you don’t add to your monthly bills. Finally, try living on one income while both spouses are still employed, putting the other spouse’s income aside. This will allow you to experience what living on one income is like while also beefing up your savings.

Pay Down Debts

What if you already own a pricey home, have hefty car payments, are still paying on student loans, and have consumer credit card debt? Is going down to one income impossible? No, but changes will have to be made. Consider downsizing into a modest home. Cutting your housing expenses will free up money to tackle student loan and credit card debt. If at all possible, get rid of any car with a large payment. Perhaps even try sharing a car until your debts are paid down. Otherwise, try to buy a late-model used car with cash. While both spouses are employed, try living on one income and devoting the second income to paying down debt.

Make a Budget

Do you sometimes find yourself wondering where your money went? Living on one income doesn’t provide a lot of wiggle room for mistakes, so you’ll want to keep on top of every dollar. First, track your spending so you know how much you are putting toward fixed expenses and how much you are spending on discretionary items. Once you know how you spend your money, decide how you want to spend your money (it’s a very different thing!) and budget accordingly. There are lots of great budget apps available that allow you to check your spending on the go. But if an unexpected emergency derails your budget, remember that title loans are available to help.

Add Supplemental Income

The person staying home should consider picking up some freelance work or side hustles they can fit easily around family obligations. Lots of stay-at-home spouses attempt to monetize blogs, watch other people’s children a few days a week, freelance in their previous profession, drive for ride-sharing services, or find another money-making opportunity that fits into their skill set and schedule.

Slice Expenses

We’ve already covered getting rid of debt and minimizing your monthly bills. Now, it’s time to start cutting discretionary spending. Dining out is usually a huge category where people spend a lot of money and can cut back fairly easily. Start by avoiding dining out for the sake of convenience or bad planning. If you aren’t even going to remember the meal, should you be paying for the privilege of dining out? Keep snacks with you to cut out desperation stops at the drive-through.

Meal-planning can save lots of money on groceries, which can be another budget-buster. Doing simple maintenance around your home, like cutting the grass and cleaning the gutters, can save a lot of money versus paying someone to do these chores for you. And take a hard look at your subscriptions to things like streaming services and gyms. Do you really need all of them?

Shop Around

Some things you just need in your life, and therefore, you must pay for them. These include services like insurance, Internet, and cell phone access. Look online for competitors’ pricing to see if you can get a better deal. You can also call your provider and ask for a discount. Perhaps if you bundle your different types of insurance through one carrier, you can earn a hefty discount, or you might find a cheaper cell phone service provider that works as well as the company you currently use. Apply this idea to all purchases. Does your kid need new shoes? Check out a few places for the best deal.

Embrace Couponing

Coupons are easier than ever to get. Start by liking companies that make your favorite products on social media, and then, sign up to have coupons mailed to you. Next, download apps for your local grocery stores. Also, download cash-back apps that give you money for uploading your grocery receipts. And make sure to maximize your savings by timing your coupon use to store sales: If you have a coupon for your favorite cereal, wait until the cereal goes on sale to use the coupon to get the lowest possible price.

Accept Sacrifices

You can’t have everything in life! Choosing to have one spouse stay at home means you’ll have to cut back in other parts of your life. Giving up extras like gym memberships, cocktails, expensive vacations, and costly gifts can allow for the financial flexibility to have one spouse not work. However, your life doesn’t have to be devoid of enjoyment. Look into memberships at the Y or cheap chain gyms, take turns hosting cocktail parties with your friends to save on expensive nights out, travel cheaply, and embrace handmade gifts.

Get Life Insurance

Life insurance is important for most adults, but it’s vital in situations where only one person brings in a steady income. Use a life insurance calculator help you estimate how much coverage your family needs. Get quotes from several reputable insurance companies, and make sure the quotes are comparable (you want to compare apples to apples). Remember that the stay-at-home spouse should be insured if they are caring for a child or parent.

Keep Saving Money

Going down to one income doesn’t mean that you should stop socking away money. The employed partner should max out any employer-offered retirement matching benefits, and the stay-at-home spouse should contribute to a Roth IRA to protect their own future. Families should also continue putting money in their emergency funds.

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