Until fairly recently, most American households survived solely on one income. I wasn’t alive then but I’ve heard stories about how things were simpler. Families shared one car, lived in smaller homes, and eating out was only for special occasions. Most meals were cooked at home with ingredients fresh from the garden. In their free time, the children helped out around the house, on the farm, or in the family business. Some kids played baseball while others worked at the local drug store. I imagine those families had their challenges, just as we do today. But life was no doubt simpler back then.
It seems like it happened overnight, but like most societal shifts, the two-income family was a culmination of many little things over time. For many families here and around the world, two or more incomes are necessary for survival. But for many families with two incomes, ultra-comfortable lifestyles became the expectation.
Many families today own a car for every family member with a driver’s license. We’ve migrated to larger homes in the suburbs and due to longer commutes, we consume more delivery and take out than home-cooked meals. We hire companies to clean our homes and take care of the lawn. Between work and running the kids to all of their extracurricular activities, there’s simply not enough time for cooking and cleaning. This go, go, go lifestyle can feel exhausting. So once or twice a year, families pack up for a vacation where they can lie on the beach, sip margaritas, and not have to think about the stresses of their daily life back home.
I’m not here to tell you that one way of life is wrong, and the other is right. Instead, I’m here to ask you, is the life you’re living the life you truly desire?
Growing up, I believed that there was a specific formula for a life well-lived. If you followed these steps, then you could be happy. So I stuck to the program exactly as I understood it. I went to college, got a “good” corporate job, took out a car loan, got an expensive place in the suburbs, spent way too much money at Banana Republic, bought a “starter house,” got married, moved up the (wrong) ladder, took lots of fancy vacations, and I still wasn’t happy. That left me wondering what was wrong with me. What had I done wrong?
As my husband, Jer, and I grew together in our marriage, we found mentors who challenged everything we were ever told. We learned that you didn’t need debt and a big house in the suburbs to live a rich life. We discovered that you don’t need expensive degrees or to work 80 hours a week at a job you hate to be a success. And most importantly, we learned that there’s not one specific formula for a life well-lived. So we gave ourselves permission to start creating a life that was meaningful to us and aligned with our values.
This message is brought to you by the worldwide lockdown during the covid-19 pandemic. Schools, economies, and life as we know it have been temporarily shut down. Even if we go back to “normal” sooner rather than later, I don’t think this disruption will quickly be forgotten. For many of us, there will be a brand new “normal.”
At this point, it’s hard to assess our losses. As the pandemic expert, Dr. Michael Osterholm, said in a recent podcast, we’re only in the second inning.
My heart breaks for the people who have lost loved ones and were unable to say goodbye. I can’t imagine how many others are struggling with their mental health. And the financial pressures and changes in daily routine have likely put most marriages to the test.
We can’t ignore the financial toll this has taken on our economy and the federal and state budgets. I can’t think of a single person who hasn’t been impacted financially. Day after day, more and more businesses announce that they will not be around to reopen.
And some people are left asking, “How can we be worried about economic matters while people are dying?” So before we move on I want to share an important perspective with you.
For the first 30-some years of my life, I did a good job keeping each aspect of life in its own neat little compartment. I never considered that finances, health, and relationships were all interconnected. But in fact, our financial matters affect where we live, what we eat, our access to physical activity, stress levels, and much more. So yes, as it pertains to health, I do believe that financial matters are important.
Now that I’ve laid all the doom and gloom on the table, let’s take a look at what’s possible. Disruptions such as these bring to light a lot of inefficiencies and unmet needs. I’m already seeing new businesses pop up in response to new opportunities. This also opens the door to completely new ways of doing business.
And I’d be remiss if I didn’t mention that the same is true for your household and family. Whether we start moving toward the new “normal” next week, a month from now, or longer; know that you don’t have to go back to the way things were.
If you were laid off, you don’t have to go back to the industry you loathe. If you’re financially maxed out, you don’t need to keep that huge mortgage and multiple car loans. If you feel better eating at home, you don’t have to go back to your old ways of going out for lunch and grabbing takeout for dinner. If you’re loving this slower pace, you don’t have to go back to your overly busy lifestyle.
Ask yourself, are you living the life you truly desire? If you could change anything and be certain it would all work out, what would you change?
Your Dream Life
If you had all the money you’d ever need, but still had to be productive in some way, what would that life look like to you? Where would you live? What would your home be like? How would you spend your days? Who would you choose to spend time with? Take a moment and picture that life. Maybe even pull out your journal and write about it. You can find a list of questions to explore here.
I picture a smallish cabin on a lake tucked away in the woods. (Or on the north shore of Hawaii – maybe both.) Each morning I would go for a sunrise paddle on the lake. In the evening I’d take a sunset stroll in the woods. I would spend my days reading and writing and creating things that help people live better lives. I’d enjoy fresh healthy meals made at home and a weekly date night out on the town. Jer could have his own space to work on his many creative interests. And of course, we’d spend plenty of time together, at home and away on epic adventures. Our lives would be simple yet rich and rewarding.
How about you? What would that life look like to you? And what’s stopping you from creating that life?
One Income to the Rescue
Whatever your dream life looks like, living on one income can help you get there.
For most of us, we become a one-income household unexpectedly. Illness, job loss, or a global pandemic knock us on our financial behinds. We then become painfully aware that we have too much debt and too little savings.
But what if you chose to live this way instead? As we work our way out of this crazy time in history and unemployment rates start to decline, what if you chose to live on one income? That doesn’t mean that you only earn one income. This means that you LIVE on one salary.
The Why behind One Income
Why on earth would someone want to do this? For most of us, that would mean cutting our spending in half. A normal response would be—No Thank You! So here are some wonderful reasons to consider a one-income lifestyle.
1 – More Margin—Less Stress
Do you remember the uncertainty that came sweeping through the country as America started to lock down with the Covid-19 pandemic? I don’t know that I’ll ever forget it. Jer and I were lucky to be on the more stable side of things. But there was still an elevated level of anxiety around here for several weeks.
Take a moment to try and recall all of the worries that ran through your head during that time. Now think about how it would have been different if you had three, six, or even 12 months of expenses on hand?
Choosing to live on one income will create margin in your budget so you can save for a rainy day. Then the next time disaster strikes, you can step forward with more courage and confidence. You’ll be able to make better decisions and stress less because you’ll know that your basic needs are covered. Just imagine how different that would feel.
2 – Better Work-Life Balance
As I’ve talked to people as this pandemic unfolded, I’ve heard time and again how people are appreciating more family time and a better work-life balance. Yes, there are things we all miss. But universally, we’re appreciating our increased time together and the simpler way of life.
When you are able to survive on one income, you’ll have the freedom and flexibility to make better decisions for your family. That might mean changing careers, working part-time, contract work, or the myriad of other income opportunities in our modern world. It could mean using t part of the “extra” income to hire help with cleaning and yard work so you can make the most of your downtime. Or maybe you’ll finally find the courage to ask for that promotion or get a new job where you make more and work less.
Whatever better work-life balance looks like to you, the security that comes from being able to live on one income will help you get there.
3 – Improve Your Financial Habits
Going from two incomes to one is a transition. In the process, you’re sure to improve your financial choices. Once these new ways of life become habits, you’ll learn to love many of them. More importantly, you’ll prepare your children to have great financial habits once they head out of their own.
4 – A Bright Future on One Income
Beyond having savings in an emergency fund, there are other places to save that are game-changers. Boosting your 401k contributions and opening a Roth IRA will ensure your needs are taken care of when you’re no longer able to work. Funding an HSA ensures you’ll be able to cover unforeseen medical emergencies without compounding debt. And participating in a college savings plan will help your kids get the education they desire without taking on hundreds of thousands of dollars of student loan debt.
Of course, there are other vehicles for saving and investing. But everything I listed here has tax incentives to boot. You can learn more about them and start building a brighter future with this post.
5 – Do More of What You Love Today
Stop waiting for retirement to take that vacation, plant a garden, or try a new hobby.
When people get to the end of their lives, they rarely talk about that huge raise or their series of promotions. That’s not to say that making enough money to live comfortably and enjoy life isn’t important. It’s when you have enough that you have the space to breathe; you’re in a better position to build confidence, find yourself, and create your best life. As much as a comfortable salary, doing meaningful work that makes a difference also contributes to our life satisfaction.
We mustn’t forget the why behind these things though. All of the money in the world means nothing if you’re lonely because you never took time away from work to nurture your relationships. A ten million dollar retirement account has little value if you’re not willing to spend it traveling and exploring the interests you love. A million-dollar bonus is worthless if you don’t have the health to spend it doing activities you enjoy.
When you choose to live on one income, you’ll get to a place where you have the time and money to do more of what you love. When you begin your journey, you’ll likely be building up your savings, and your discretionary budget will be smaller. But that won’t bother you because you know that there’s a much better future ahead. Not to mention, you’re excited to explore all of the wonderful, inexpensive hobbies that won’t break the bank.
Who else is ready to stop waiting for retirement to start doing more of what you love?
Our Journey to One Income
As I was preparing to write this, I thought about when it was that we truly started living on one income. I’ve always been a saver, but it wasn’t until we were married for several years that we really focused on spending less than half of our income.
I think the turning point was in 2011 when I started tracking our spending and budgeting. Being able to see how much we were actually spending in each category was eye-opening. Groceries, cigarettes, eating out, and travel were large expenditures for us back then. After a few months of tracking, I could see that how simply cutting back to the bare necessities could offer financial freedom in just a few short years.
This realization pushed us to get ultra-serious about saving and paying down debt. In just over two and a half years, we were completely debt-free. To celebrate that, along with our tenth wedding anniversary, we planned an epic three week trip to Hawaii, later that year.
Remember in that last section how I was saying that it doesn’t matter if you make tons of money if you’re essentially unhappy? Well that my friends comes from first-hand experience. When the time came to enjoy what should have been a trip of a lifetime, it took the first five days for me to calm down enough to actually enjoy it. And then three days before we were set to fly back, I started having terrible nightmares about returning to work.
This prompted some serious discussions between Jer and I. Over the previous two years, he had prodded me, here and there, to leave my job. But we were so close to achieving a big financial goal that I decided to tough it out. Maybe that was a mistake. But it brings us here today with this story that could potentially change someone else’s life.
Immediately after that trip, we began making plans for me to leave that job. On paper, the numbers worked, but the thought of going down to one income was terrifying. In my mind, there was no going back once the final decision was made. Looking back, I see how this way of thinking was flawed. I now know that there is always something better ahead.
After making our decision, I decided to work six more months, while living on one salary. This would allow us to see if it was truly possible. And in the process, we could save up to have an extra beefy one income emergency fund.
As it goes when you set an intention and start taking action, things began to take shape more quickly. My six-month plan became a three-month plan. We’ve been living on one income ever since and I don’t plan to go back, no matter how many incomes we bring in.
At first, it was a strange adjustment. In a post about job loss, I wrote reg how work is so much more than an income. It’s our social outlet, where we make friends, serve a purpose, and so much more. I knew this and had built habits and structure into my day. I also had hobbies, volunteer work, and ideas on new ways to contribute value to this world. But it was still weird and I imagine that those of you whose workplaces closed during the covid-19 pandemic experienced something similar.
I adjusted though. And began a very healing journey.
On the money front, I became more frugal than ever. I had more freedom in my schedule but was careful not to spend money considering that we only had one income for real. As time went on our income slowly increased and we became more comfortable spending again.
What we didn’t expect from all of this were the other benefits that came with this new lifestyle. We’re doing better than ever financially. We’re in great health because I have the time to shop for and prepare healthy meals daily. With me managing the household, we both have time to exercise, meditate, and get more than enough sleep each day. By getting out of a toxic environment, my mental health has improved, which has had a ripple effect within our household and community. We have both become more courageous and confident. Our marriage, although there are peaks and valleys just like everyone else, is the best it’s ever been. We have new connections and friendships and a widening circle of healthy relationships.
Our lives are remarkably better. But let’s not forget that it’s been a long journey. It was totally worth it and I’d do it again in a heartbeat. But I want to be transparent about what you may be getting yourself into.
Don’t Take my Word for It
Don’t just take my word for it. Several years later, I heard from a friend that his wife was going to lose her job. Instead of the panic and despair that comes with this type of news, he sounded happy and truly excited. After the dust had settled, I asked him to share his story. He generously agreed and you can read it here. You’ll see many similarities between our two stories. I hope it’s inspiring to you.
How to Live on One Income
More often than not, people end up living on one income via circumstance rather than choice. I can’t imagine how scary and terrifying these situations must be. In this case, by all means, do what you need to do to make ends meet. That will likely mean getting back to work or finding a way to replace your income as quickly as possible. Once you are no longer living in fight or flight, you’ll be better able to work through the following steps.
1 – Stronger Together
If you’re reading an article about living on one income, I’m going to assume you’re doing life with someone else who contributes financially. Whatever that looks like in your situation, it’s important that you work through this together. That’s not to say that you’ll agree on everything. And believe it or not, that’s a good thing.
As I’ve shared in other posts, Jer and I are wired very differently. These natural tendencies spill over into everything, especially our financial habits. I’m a saver and always have been. As a child, I knew exactly how many pieces of candy I could have each week to get me through until the next holiday candy replenishment. Jer, on the other hand, sees no point in “hoarding” that candy and eats it as quickly as he can. As it pertains to our finances, I’m well aware that if left to my own devices, I would “hoard” so much more money, and enjoy fewer meaningful experiences.
Before you dive into creating shared goals, take some time to acknowledge what the other person brings to the table. This way you’ll be prepared to resolve conflict quickly so you can keep working toward the greater good.
2 – Define Your Why
Now that you’re working as a team, come together to define the specific reasons you want to do this. Perhaps you want to enjoy more quality time as a family. Maybe you want to set a better example for the next generation. You might simply be inspired to have the means to give generously. Whatever it is, decide as a team on the why that will drive this journey forward.
3 – Slow and Steady Wins the Race
As I mentioned earlier, it took us about four years to get from tracking our spending to one income living. Depending on where you are right now, it could take more or less time. While there’s a lot you can do to accelerate the process, committing to slow and steady from the start will help ensure you make it to the finish line.
4 – You Need a Budget
You don’t need a detailed excel workbook that tracks every aspect of your finances over the last decade and counting. (You totally know I do that, right?) But you do need to know exactly how much you have coming in and going out. You can learn more about creating budgets here. And while you’re at it, don’t forget rule number one and make sure you work together to create something that energizes both of you.
5 – Increase that Income
The more you earn, the quicker you can meet your financial goals, plain and simple. But when it comes to this part of our finances, most of us are plagued with some sort of limiting belief. Pick your poison: I don’t have a college degree, real artists don’t sell out for money, I don’t have experience in that area, and the list goes on. So first things first. Try to identify the lies you’ve been telling yourself that have prevented you from earning the income you deserve.
When you’ve figured out what’s been holding you back, check out these ideas to help you get that income growing.
6 – Slash Your Expenses
Wherever you are financially, it’s always a good idea to review your expenses and trim the fat. Be honest, if you went through your budget right now, how many things would you find that you pay for and don’t really use? That piece of software you pay for monthly, your gym membership, roadside assistance that’s already included with your auto insurance, or maybe you still haven’t cut the cord on your home phone—it’s all fair game.
Make it a habit to go through your budget at the end of each year, as a team, and find anything you can slash. Here’s a list of 103 things to help you get started.
7 – Eliminate Debt
Have you ever lost a job or experienced a pay cut? If you can, remember how you felt during that time. Now imagine that you didn’t have any debt—no mortgage, car payments, or student loans. How different would that experience have been for you?
Becoming debt-free from wherever you stand today will be a journey. But it will bless your life in more ways than you could imagine. Check out this post to learn more about how becoming debt-free changed our lives. Then bookmark this page for the day you’re ready to start kicking your own debt to the curb.
8 – Cash is King
My Grandfather was a quiet man. So when he spoke, people listened. One of the things I remember him saying is that “if you can’t pay cash for it, you can’t afford it.” I don’t recall the specific context or if it was even about me. But I do know that one sentence played a huge role in preventing me from getting myself into financial trouble.
I’ve mentioned this several times throughout this post, as well as in my last blog post. The people and businesses with cash on hand during the covid-19 pandemic and ensuing financial crisis had a very different experience.
The title of this section came from a friend I checked in on while in lockdown. Even though business had tanked and they suffered a pay cut, they were feeling optimistic. They had recently downsized their life to be able to live debt-free. Part of their reply read, “Debt is dumb, cash is king, no worries in that department.” Don’t you wish we’d all be able to say that during the next crisis?
9 – Only Spend on Things that Bring Joy
Studies have proven what most of us instinctively know. More stuff does not mean more happiness. So whether you make $50,000 or $500,000 per year, your life will be richer when you only spend money on things that bring you joy.
10 – Build a One Income Support Network
I’ve used this quote countless times so it might start feeling cliché. But it’s one of the truest lessons I’ve learned. And personally, I learned it way too late in life. So as a public service, I will continue to shout it from the rooftop.
The hard truth is that if all of your friends spend more than they make, you’re more likely to follow suit. If everyone you know spends thousands of dollars each month at bars, restaurants, and concerts; you might feel like you need to join the crowd or be lonely forever.
When we got serious about paying down our debt, we didn’t have a lot of friends who were good with money. But we had each other and that was enough to keep us going. The cool thing that happened was that other people began to follow suit. And over the years our support network has grown.
If you have a friend who is good with money, reach out and have a chat. If no one comes to mind, seek out an online group. There are so many ways to find support these days. There’s no reason to keep going it alone.
When You’re Forced to Live on One Income
Some people choose to live on one salary, no matter how many they have. Others are forced to temporarily live on one income when they lose a job or experience a temporary life disruption. But there are times in our life when we need to survive on one income indefinitely. These situations include things like: the cost of childcare being so high that it no longer makes sense to work, a serious illness that requires you to leave your job, or a family member that needs 24-hour care.
These situations can be much more difficult to navigate than temporary things like a layoff. But if you follow the steps above, I know you’ll be able to figure it out. The fact that you’re here tells me you’re already well on your way.
Here are a few more tips to keep in mind if one income living looks like it will be a semi-permanent endeavor.
1 – Eliminate Black and White Thinking
It’s a common belief that if we pursue work we love, we’ll make less money. Or that if we change industries, we’ll have to start from the bottom. But I’ve seen time and again that these beliefs are just that. They’re beliefs, not facts.
Instead, start using the word AND. I can do work I love AND make a lot of money. I can move into an industry I care about AND get a raise. We can go down to one income AND enjoy a better lifestyle.
2 – Build a Bigger Emergency Fund
In a post about emergency funds, I listed different scenarios when you’d want more emergency savings. And living on one income is one of those scenarios. At a minimum, I think every business and household should strive to have at least three months of expenses on hand.
For a single income family, I’d be more comfortable with six months of expenses in cash. When stressful things happen, you can sleep better and make wiser decisions when you’re not worried about how you’ll put food on the table.
I realize that saving six months of expenses takes time. It took us a while to build up our reserves as well. So always be sure to continue saving by making it a priority in your budget. Then one day you’ll wake up and you will have achieved the impossible.
3 – Decide What You Value and Prioritize
What does your family most value? What do you love doing that brings joy to the whole crew? You probably know the answer, but have you discussed it as a family?
Living on one income means you’ll have to make sacrifices. These decisions will be easier to make if you decide what’s important ahead of time.
4 – Run the Numbers and Do a One Income Trial Run
If you have a budget, you should easily be able to figure out what you’ll need to do to make it work. Do you need to cut spending, start a side hustle, all of the above?
If you can, get on this new plan and do a trial run before you say adios to that second income. It will be less stressful to make mistakes and figure things out while that second income is still coming in.
5 – Replace What You’ll Miss at Work
This may be the most important point of all. If you are leaving work, find ways to replace everything you’ll lose. In the aforementioned post on job loss, I covered all the things we lose when we lose our jobs. We lose our friends, a built-in social life, as well as purpose and meaning.
Think about what you will miss and create a plan for how you’ll meet those needs on one income.
Where to Begin
I realize this is a lot of information to take in. My goal is to make comprehensive guides to meet most people wherever they’re at. So if you’re feeling overwhelmed, take a deep breath, and let’s talk about where to begin.
The internet, mainstream media, and bookstores are filled with the definitive guide to just about everything. But the truth is that we’re all uniquely and wonderfully made. We’re all motivated by different forces and have distinctive strengths and weaknesses. So the best course of action is going to look slightly different for each of us.
Begin by asking yourself what your goal is. Do you want to stay home with your kids while they’re still young, build an emergency fund, or create margin to live a healthier lifestyle? If you’re like me, you’ll want to do it all at the same time. But I promise you’ll enjoy more success if you just pick one thing.
Now ask yourself, what’s the first step you need to take to get there? Do you need to track your spending, create a budget, or send your credit cards through the shredder?
Pick one thing and do it. I know it can be scary but I’m sure your credit card company would be happy to send you a replacement card if you change your mind.
Next, you’ll pick another small step, take action, and then start the process over again. Once you start gaining some traction, feel free to create a more concrete plan with specific goals and timelines. You can learn more about my planning process here.
No matter why you’re doing it, living well on one income is doable. It can even be an enriching experience if you follow these tips. Life is so much more than fat bank accounts and fancy job titles. The things we remember at the end of our lives are our relationships and experiences. Perhaps choosing to live on one income could give you more of both.