living on one income
Updated October 08, 2021

17 Secrets to Living on One Income (Without Being Rich)

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It’s common for many families to eventually live on one spouse’s income.

Ideally, you’ll have plenty of time to prepare for living on one income.

But even if a surprise life event drops your income overnight, it’s still possible to live within your means.

Using the tips below, my wife and I were able to afford a 60% pay cut in 2015.

We went from earning $80,000 to $35,000 when our first child was born.

Granted, living in Tennessee, our dollars go a lot further than in other places, but nevertheless I’ll be the first to admit that it was scary making significantly less money.

However, we have never missed a bill due date and still save money for the future.

If possible, try adopting these new practices while you still earn dual incomes.

You can practice living on a smaller income and keep increasing your savings with your extra income.

Cut Expenses

The quickest way to adjust to your new income is by reducing your monthly bills. It’s not easy spending less money at first. It gets easier once you establish a new routine.

1. Make a Spending Plan

Make a Spending Plan

When you earn a high income and have low expenses, it’s easy to think money grows on trees.

In our case, we could buy anything we wanted most months and still set money aside for large expenses.

On a small income, there are some months when you must either make a large purchase or put your extra income in savings.

For instance, I rarely balanced the checkbook when we had a 50% savings rate.

But when we went from saving half of our take-home income to living paycheck-to-paycheck, we needed to know how we spent every penny.

We wrote every expense down for 30 days, including:

  • Utility bills
  • Groceries
  • Insurance
  • Entertainment
  • Gas
  • Investing
  • Saving for upcoming expenses

After seeing where your money goes in a typical month, decide which expenses are “non-essential” and try canceling or reducing these bills.

Then repeat the tracking exercise for the next month to see what else you can adjust.

It can take several months to fine-tune your spending plan. Using a free budgeting app is an effortless way to track spending or make a basic budget.

If you can afford $84 a year, I highly recommend YNAB.

We used it for our first year living on one income until we got into a new money routine.

This tool is one of the most thorough ways to track spending and plan for uncommon expenses.

2. Cut Recurring Subscriptions

Cut Recurring Subscriptions

The easiest expenses to cut first are your recurring monthly bills.

We canceled streaming plans we rarely used and other home delivery services that were nice to have.

All of those $10 to $60 monthly charges quickly turn into a large sum.

Trim is a free tool I use to negotiate lower bills.

I get an occasional discount on my cellphone and home internet plan.

3. Switch to Prepaid Services

Switch to Prepaid Services

When possible, switch from contract services to prepaid plans.

Instead of renewing your cable TV contract, try switching to Hulu with Live TV.

Not only can you pay less money, but you can cancel penalty-free.

For instance, you may watch cable TV only during college football season.

During those months, you subscribe to a live TV cable alternative but cancel once bowl season ends.

You won’t pay a cancellation fee or a reactivation fee.

We also switched to a prepaid cellphone plan.

For the same monthly price, my wife and I get double the data.

On our old plan, we paid a data overage charge several months each year (although paying the fee was still cheaper than upgrading to a more expensive plan).

4. Cook Your Own Meals

Cook Your Own Meal

Another eye-opening expense for me was my annual restaurant spending.

On average, I spent $20 each workday on dining.

That comes to about $5,000 in restaurant meals each year.

The same meals could have been cooked at home for a fraction of the cost. Today, I rarely go out to eat, and we cook almost every meal at home.

At a minimum, buy premade meals from the grocery store freezer section.

They can be cheaper than going out to eat.

Better yet, make a meal plan and buy fresh ingredients.

For instance, the official USDA food plans estimate a family of two with a moderate food budget spends $612.40 monthly.

A family of four with two children between ages 6 and 11 will spend $1,060.50 per month.

Your expenses may be higher or lower, but this is a good benchmark.

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5. Pay Off Debts

Pay Off Debts

Living on one income is also easier when you become debt-free.

We still had a mortgage payment when we began living on one income.

That loan is now paid off, and we no longer have a $700 monthly payment.

In our case, becoming debt-free was like an instant $8,400 salary increase.

If you’re in debt, focus on paying off your high-interest balances like credit cards first.

Make extra payments whenever possible.

Make sure the extra payment applies to the loan principal.

The less you pay in interest means the sooner your remaining loan balance disappears.

Also, avoid going into debt when making large purchases.

One way we save money is by paying cash for used vehicles and vacations.

Other ways you can pay off debt sooner (besides extra payments) include:

  • Consolidating your debts into a personal loan
  • Asking your credit card company for a temporary purchase APR decrease
  • Refinancing your existing loans (home, auto, student loans) for a lower interest rate

6. Requote Insurance Premiums

Requote Insurance Premiums

It’s a good idea to compare insurance premiums once a year since another provider may offer similar coverage at a lower price.

Gabi is a great place to start to compare auto insurance rates for free.

You might be able to save extra money by bundling your products.

For instance, we have our homeowner’s, life insurance, and rental property insurance all at the same agency to get a multi-policy discount.

You may also need to buy standalone life insurance.

Previously, I used my employer’s term life insurance policy.

My wife and I both have term life insurance to financially protect our family if the unexpected happens.

7. Buy Used Items

Buy Used Items

When possible, we try to buy used items before buying brand-new from a retail store.

Some examples include cars, clothing, furniture, and kitchen appliances.

We scour Craigslist, Facebook, and eBay for deals.

If you can wait several weeks or months to make a purchase, you have more time to find the best deal.

8. Avoid Impulse Purchases

Avoid Impulse Purchases

All of us have varying degrees of willpower.

For example, I don’t go down the chips or candy aisle of the grocery store without buying something.

Although this is an extreme example, some people “have to” buy a new car after going on a test drive.

Here’s how we avoid expensive impulse buys.

We set a spending limit where we must wait at least 24 or 48 hours to make a large purchase.

In our case, my wife and I discuss making purchases above $100.

Our spending plan has enough wiggle room where we can make a small purchase, like a cup of coffee, if we want it.

9. Save for Large Expenses

Save For Large Expenses

As a dual-income household, you may currently have the ability to pay for large expenses with a single payment.

For example, you can buy two $3,000 plane tickets while paying your normal monthly bills in full.

On a single income, this may no longer be possible — unless you pull from savings or carry a credit card balance, which I don’t recommend if you don’t have too.

These are your four best options to save for large purchases:

  1. Put small amounts of money into a dedicated account each month.
  2. Delay the purchase until you can pay in full with cash.
  3. Look for a cheaper alternative.
  4. A combination of the above options.

We set aside money into separate savings accounts for vacation, property taxes, and new vehicles.

This budgeting strategy is adopted from Dave Ramsey’s Envelope System.

You spend how much money is in the envelope and don’t borrow from another one to pay the bill.

10. Maintain an Emergency Fund

Maintain an Emergency Fund

Having an emergency fund is essential.

Make sure your fund can afford one month’s living expenses.

Because we live on one income, we keep a six-month emergency fund.

Having this much cash may seem extreme to some.

But you’ll be glad to have the extra cash if the sole breadwinner loses their job.

It can take several months to replace your current income.

Saving for six months of expenses may seem difficult.

Reducing your recurring monthly bills means your current savings can last more months.

For example, you need $15,000 in your emergency fund to cover six months of $2,500 monthly expenses.

And you need only $12,000 if you trim your monthly bills to $2,000.

Make Money

All of us can only cut spending so much.

Like you, I’m not ready to go homeless or stop eating to drop my monthly expenses to $0.

It can be easier to make more money to survive on one income than continuing to cut spending.

11. Side Hustles

Side Hustles

My wife and I both use our free time to make extra income with a side hustle.

For instance, she works from home part-time teaching music lessons.

I keep our children during these hours so we don’t have to hire a sitter.

One day a week, I tutor high school students to make extra money.

Thanks to the internet, it’s easier than ever to earn a side income from home.

You no longer have to work at a restaurant or retail store on nights and weekends to make extra money.

We all have different skills and interests.

Here are some of the different ideas you can pursue:

  • Freelance online (graphic design, writing, virtual assistant)
  • Tutor English online
  • Mow lawns
  • Be a local photographer
  • Drive for Uber or Lyft

12. Sell Unwanted Items

Sell Unwanted Items

We also sell unwanted items for cash.

Some of our friends try selling anything that hasn’t been used in two years.

Not only do you declutter your house, but you make money in the process.

Start by selling local on Craigslist and Facebook Marketplace.

Both platforms are free.

We sell clothing, video games, kitchen gadgets, and other items we don’t really use.

For small items with low shipping costs, consider posting them on eBay and Amazon as well.

Remember that your seller fees are approximately 13% of the final price.

If you offer free shipping, this cost also reduces your profit margin.

I also sold valuable items that I didn’t need.

For example, I sold my 2012 Ford Mustang GT for $20,000.

Even though I didn’t have a car loan, the money was more useful than a fancy car quickly depreciating in value.

We used half of the proceeds to buy a family-friendly vehicle (no loan!).

The other half went into savings and making an extra mortgage payment.

See what other big-ticket items you have that are nice to own but not necessary.

If you’re still making loan payments on the items you sell, use the first portion of the proceeds to pay off that loan.

13. Use Cashback Shopping Apps

Use Cashback Shopping Apps

Another way we get a few extra bucks each month is by using cashback shopping apps.

These apps are free and don’t increase the price of the items you buy.

For most online purchases, we get up to 10% cash back using Rakuten (formerly known as Ebates).

Simply activate an online shopping session before you pay for your purchase.

Once your balance reaches $5, you get paid by PayPal, paper check, or gift card at the end of the current calendar quarter.

You can also get money back on groceries. I personally like Ibotta.

Download the app to your phone and activate the digital offers.

Then upload a picture of your receipt so Ibotta can match your purchases with the active offers.

You can redeem your rewards for PayPal cash or gift cards.

Earn Passive Income

One of the most difficult transitions for me was having less money to invest.

Consequently, it’s harder to earn passive income.

Living on one income doesn’t disqualify you from earning passive income.

But since your annual salary is lower, passive income plays a more important role in building net worth.

While you’ll probably have less free cash to invest, it’s still important to invest at least something.

Keeping our expenses low and having side hustles are two ways we can invest.

14. Invest at Least 10% of Your Income

Invest at Least 10% of Your Income

A general rule of thumb is to invest at least 10% of your income for retirement.

This is good advice if you start saving in your 20s.

But if you start in your 30s or later, you may need to contribute more to “catch up.”

At least 15% or 20% or your household income may be necessary to meet your retirement goals.

Robo-advisors like Betterment make it easy to invest small amounts of income.

Each investment only needs to be at least $10.

Betterment invests your cash into a mixture of stock and bond index ETFs that align with your risk tolerance.

Another reason I like Betterment is it also offers retirement accounts.

All your investments can stay in one place.

15. 401(k) Matching Contributions

401(k) Matching Contributions

If your employer matches a percentage of your 401(k) contributions, maximize this benefit.

This is like an indirect salary increase.

Since you can’t touch the cash until retirement, you don’t risk spending this money on short-term expenses.

How much you contribute after your 401(k) match depends on if you have a good plan or not.

What if the plan has high fees or lacks index funds and target date funds?

Your best option might be investing your extra income into an individual retirement fund.

16. Make IRA Contributions

Make IRA Contributions

For money you don’t need until retirement, invest using an individual retirement account (IRA).

You can invest in just about anything your broker offers, including target date retirement funds, index funds, and individual stocks.

You pay taxes on these contributions only once. When you pay income taxes on your contributions depends on which IRA account you choose.

Traditional IRA vs. Roth IRA

Traditional IRA contributions grow tax-deferred. This means your taxable income is reduced for the current tax year. But you pay income taxes on the withdrawal amount in retirement. So if you make $35,000 a year and contribute $6,000, your taxable income is $29,000 excluding any other deductions.

Roth IRA contributions grow tax-free. You pay income taxes on the contribution amount for the current tax year. But you don’t pay taxes on withdrawal amount or capital gains again.

Each person can contribute up to $6,000 in 2020 in total IRA contributions. Once you turn 50, you can make an extra $1,000 catch-up contribution each year. You may make only one type of contribution or split between a traditional and Roth IRA. An even split would be $3,000 into a traditional IRA and $3,000 into a Roth IRA.

To avoid potential tax penalties for overcontributions, please review the current IRA contribution limits.

17. High-Yield Savings Accounts

High Yield Savings Account

In addition to having an emergency fund that can cover between three and six months of living expenses, keep putting some money into a high-yield savings account.

For instance, the money we save for large purchases goes into these accounts.

We also have money that isn’t in our emergency fund but we can use for other near-term expenses like car repairs, home repairs, or medical bills.

Make sure these accounts are fee-free.

Otherwise, the account maintenance fees can cost more than the interest you earn.


Living on one income can be difficult without a routine.

The first thing you need to do is make a spending plan to spend less than you earn.

Finding ways to reduce expenses and earn extra income can make it easier to live within your means.

Are you currently living on a single income? What’s your greatest challenge? What else do you do to manage your money well?

Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

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Josh Patoka

Josh Patoka is a father of three who left his corporate job with a 70+ hour-a-week job to pursue self-employment in 2015. Today, he writes about frugality, paying off debt, and making extra money for several blogs including His goal is to help others “afford to quit their job” to achieve a better work-life balance.

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