Learning how to live on one income takes work, but it’s well worth the effort. As a single person who has lived on one income for nearly six years, including four in Canada’s second-most expensive city, I’m eager to share my expertise on:
- Why you should live on one income, even if you don’t need to
- Tips on how to create a life you love without sacrificing fun
- Important considerations to make to ensure short-term and long-term financial health.
Read on to learn about how to live on one income.
Understanding the Value of Single-Income Living
My Story – The Value of Living and Thriving on a Single Income
Living and thriving on a single income is possible. I’d like to tell you how by sharing my personal story. For the past six years, I’ve been living on my own and generating a single income. While I have temporarily held multiple income streams – for example, when I worked for the Canadian government for a summer while holding down my regular job – I’ve had to rely on solely myself to pay the bills.
“How did I do it?” you might be thinking. Simple: careful planning and forethought. Understanding my financial health was key in deciding:
- When I was in a situation where I could move out on my own instead of living with family
- How much I could and should set aside for investing goals such as retirement
- Realistically how much I could spend on rent without being ‘house-poor’
- How much I could set aside for fun stuff like clothing or vacations
The Value of Living on a Single Income as a Couple or Family
My story is all about living on a single income as a single person out of necessity. However, what if you’re a couple with or without kids who lives on two or more incomes? Surely this article doesn’t apply to you? Not so fast! There are several different reasons why you should learn how to live on one income:
- Developing discipline – when you learn how to budget with tighter funds, you’ll become more stringent with your saving and spending habits. When I am strict and set a limit on how much I’m allowed to spend on non-essentials, my discipline pours over into other aspects of my life – for example, limiting how much TV I watch and ensuring I regularly move my body
- Being prepared to handle hardships – whether we like to think about it or not, we all have rainy days – or even weeks or months. At some point or another, you’ll likely either get laid off from your job or have some sort of unexpected expense come up. When you already live on one income but make two incomes, you won’t be severely shocked when you need to live extremely frugally out of necessity. Less shock regarding your finances means reduced anxiety.
- Learning how to appreciate what you have – living on one income often means making sacrifices and getting creative with ways to have fun that won’t break the bank.
Key Considerations When Learning How to Live on One Income
Planning Steps for Learning to Live on One Income
Nail Down Your ‘Why’
Successful one income living isn’t for the faint of heart, but it’s worth the effort. When I started the process of committing to actually save money to pay off my debt at the end of the month, I had some initial steam and excitement. However, that motivation quickly wore off. Why? I didn’t have a goal in mind. I was aimlessly telling myself “I need to stop spending so much money.” Of course, when temptations arose such as buying a brand new winter jacket at the mall (even though I already had 2), I caved.
Construct a Budget Carefully
Next in your plan when living on one income: you’ll need to create a budget. What is a budget? Simply put, it’s a plan for how you’re going to save and spend your money. Budgets can be made for many different time periods. I find that planning using a monthly budget works best for me. I’m able to plan around when my income comes in every month. Plus, my recurring expenses generally get charged once per month (with the exception of annual payments such as subscriptions and life insurance payments).
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Practical Steps for Learning to Live on One Income
After you’ve planned, you’ve laid the foundation for actually living on one income. Next, let’s get into my top tips on how to live on one income.
Limit, Reduce and Eliminate Debt
Debt can really hold you back from building wealth and truly enjoying the here and now. While not all debt is bad (for example, mortgages or student loans), it’s important to consider if and how you can start paying it down faster.
Consider Tax Obligations
If you’re self-employed, you may need to remit your own taxes to your government. Consult a financial professional to help you create a plan for paying back taxes either several times throughout the year or once a year at tax time.
Invest Time Instead of Money
The Power of Time and Compound Interest
Time is your biggest asset – especially if you’re young. The longer you invest your money, the more time you’ll have to let it grow.
Embrace Sacrifices
Be willing to wait a little bit longer to enjoy a reward – for example, waiting two more months to buy a pair of shoes in cash instead of putting it on credit.
Become a Master Frugal Shopper
Learning to live on one income means you’ll need to cut down all expenses as much as possible. Here are the top ways I’ve cut down on expenses while living in a single income family (me!):
- Opting to buy clothing and appliances at thrift stores first, secondhand via Facebook Marketplace, and retail last
- Comparing the price of the same item at 3-5 stores and online marketplaces before purchasing
- Factoring in any coupons and discounts before purchasing items – that more expensive item at one store may actually be cheaper with a discount applied
- Wait 24 hours before making a purchase over $20 – even if you think you need it. Trust me, once you wait 24 hours, you’ll realize you don’t need those pine-scented candles. You already have 3 at home you forgot about while out!
A Final Word on How to Live on One Income
There you have it – my guide on how to live on one income. I hope my personal insights and tips have inspired you to make positive changes in your financial life. Even one or two changes really make a huge difference in the long run. Start small and over time, you’ll see the incredible progress you’ve made! Pat yourself on the back for making a commitment to live a more balanced life.
Resources for Single-Income Households
- Tips on Frugal and Thrifty Living by Frugal Fun Finance
- Family Financial Planning by Frugal Fun Finance
- Supporting Your Family on a Single Income by N26
- 12 Strategies for Living on a Single Income by SoFi
- How to Create a Budget for a Single-Income Family by Medium
- An Honest Look at Life on One Income by Kalyn Brooke
- Your Guide on How to Budget Money by NerdWallet
- The Completely Achievable Path to Becoming a One-Income Family by BecomingMinimalist
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Janita is a frugal living expert and owner of Frugal Fun Finance. With over five years of personal experience finding and trying out the best ways to make and save more money, she's eager to share her knowledge. Janita's strategies have helped her save thousands of dollars for funding investments and traveling to over 20 countries.
Janita completed training in personal finance at The University of Western Ontario and McGill University, two prestigious Canadian universities. Her expertise has been shared on GoBankingRates, Yahoo Finance, and NASDAQ.com.
