Living on One Income

Many American households are barely getting by on two incomes. They can’t even dream of surviving with one.

Or can they?

Almost 33% of families with children are single-income households. And 23% of married couples without children rely on only one breadwinner.

Some of them have no choice due to a variety of reasons. But many voluntarily make this financial sacrifice, figuring there are more important things in life than chasing money.

There are, but how do you make ends meet on a single income? How do you enjoy life if you’re perpetually worried over how you’ll pay this month’s electric bill?

Good news! With proper planning and dedication, it can be done.

How to Live on One Income

The median (half above, half below) household income in 2023 was $80,610, according to the U.S. Census Bureau. What if that were cut in half, or even by one-third because one of the income streams went away?

Life would change drastically, but that is often the goal when a family decides to get by on a single income. Here’s how to do it.

1. Determine How You’ll Manage Your Finances

Having one income reduces your financial margin of error. If you don’t keep a close track of where your dollars are going,  you might not have enough of them to pay your bills.

Some couples have separate bank accounts. That can work if both are making money, but joint checking and savings accounts are easier to manage.

You’ll need to prioritize expenditures. Separate “needs” (mortgage, groceries, insurance, gas) from “wants” (Netflix, Happy Hours, Turkish baths).

Credit card debt can be a major drain on a budget since it comes with interest charges. If that’s an issue, consider credit counseling. An advisor from a nonprofit credit counseling agency might suggest a debt management plan that will reduce interest payments and help pay off your debt.

Even if you’re debt free, it wouldn’t hurt to discuss your financial picture with someone whose job it is to see that picture clearly and find ways to help you manage your money.

2. Make a Budget

You can’t manage your money if you don’t know where it’s going. If you’re already monitoring your revenue and expenses, you’ll need a new budget if you’re going to have a single income.

If you don’t already have a budget, get one. Track your spending for at least a month and categorize where the money is going. Then you can differentiate between “needs” and the “wants,” and adjust accordingly.

For instance, if you’re spending $100 a week on Date Nights, consider renting a movie ($4.99) and making your own popcorn ($8.88 for a 12-pack of Pop-Secret) twice a month. That’ll save you about $180 a month.

And don’t forget to plan ahead. If you have kids, saving for their education is not a “want.” Neither is saving for retirement, unless you plan to work until the day you die.

3. Prepare an Emergency Fund

Emergencies happen, and they don’t care if you’re a one-income or 10-income household. But the mere thought of an emergency can bring extra anxiety to one-income households.

You will sleep much better knowing you are prepared for a hospital bill or new transmission on that 10-year-old car. If you really want to avoid waking up in a cold financial sweat, have enough money in your emergency fund to cover six months of living expenses.

Ideally, you will have an emergency fund before dropping to one income. Either way, you should make it a priority, even if it requires some serious belt-tightening.

The last thing you want is to use a credit card to pay for that medical emergency or car repair. The average interest rate on credit cards almost doubled from 12.9% to 22.8% between 2013-2023, according to the Consumer Financial Protection Bureau.

Credit cards can be a quick fix, but they are also a good way to sink further into debt once the real bills come due.

4. Cut Costs

Becoming a one-income household offers many freedoms, but it comes with a cost. Cutting costs, to be precise.

Once you’ve established a budget, go down the list and ask yourself which ones you really need.

Also, try to find less expensive alternatives for the items you do need. Some ways to do that include:

• Canceling subscriptions
• Reducing electricity use
• Buy generic products
• Consolidate debt
• Use coupons
• Eat at home
• Order water when you eat out instead of paying $3.79 for a soft drink
• Stop smoking
• Take shorter showers
• Cancel gym memberships
• Drink homemade coffee on the morning commute to work

Sure, it’s easier (and probably tastier) to drive through Starbucks to pick up a $10.25 Churro Frappuccino. But the aftertaste of that expense will leave a bad taste in your bank account.

5. Avoid Debt

Debt is the ultimate four-letter word when it comes to achieving financial security. Even if you don’t spend another dime, debt grows every month due to interest charges.

Credit card debt rose to a record $1.14 trillion in 2024, according to the New York Fed. The average U.S. household will spend almost $1,200 on credit card interest. That’s like shoveling a pile of $1 bills into a furnace.

As astronomical as credit card debt is, student loan debt says, “Hold my beer!” Americans have almost $1.65 trillion in student loans, according to the Education Data Initiative. The average public university student borrows $32,362 to get a bachelor’s degree.

The Biden Administration’s student loan forgiveness programs have relieved some of that weight, but court rulings and the 2024 election make massive forgiveness unlikely.

And there is no credit card forgiveness program in sight.

Ideally, you’d get out of debt before attempting to become a one-income household. If that’s not feasible, make it a priority to pay off old bills before acquiring new ones.

6. Explore Tax Withholding

Becoming a single-income household means your tax situation will change. Be sure the changes work in your favor.

Your employer withholds a percentage of your paycheck as income tax, which is paid to the IRS. The withholding amount depends on many factors, some out of your control.

Some you can control, like claiming dependents to get deductions. Analyze your tax situation. You might be able to adjust your withholdings and increase your take-home pay.

7. Sell a Car

A single-income household probably only needs a single car. In theory, the non-working partner won’t need to get to work. Or, that person could drive the working partner to work and have the car at their disposal.

Whatever the case, if you can get by with one car, do it.

The average cost of owning and operating a vehicle is $8,100 a year, according to the Bureau of Transportation Statistics. That’s a lot of money to pay for a budget item you could probably live without.

» Learn More: Budgeting for a Car

8. Downsize

Selling a car is a big-ticket exercise in downsizing. There are many more nonessential items you could jettison to help make ends meet on a single income.

You could start with your house. It may be too big or swanky for what you really need.

On average, a swimming pool costs $180 a month to maintain, according to Forbes. That would buy a lot of groceries. A smaller home (without a pool) or condo also would mean lower bills, less maintenance, and more free time.

Take inventory of all your belongings. Keep what you cannot live without. The rest of it could fund your new single-income lifestyle.

9. Earn Additional Income

Adjusting to a single-income life doesn’t just require cutting expenses. One person is giving up their paychecks, but that doesn’t mean he or she can’t still earn money.

There are countless side jobs out there, from pet sitting to tutoring to selling items online to donating plasma. Also, additional income doesn’t necessarily mean working.

You might be able to collect rent for a spare room or garage space. Anything that puts more money in your pocket is worth considering.

Benefits of Living on One Income

Having less money has tangible downsides. But if you are prepared, you can endure the initial financial shock and appreciate the good things that come with living on a single income. They include:

• More family time
• Easier to manage your household
• Cheaper to run your household
• Schedule flexibility
• More time to volunteer or pursue other interests

Preparing to Live on One Income

There’s no sugarcoating the fact that living on a single income can be risky. Unless you are comfortably wealthy, to begin with, it will require a total overhaul of your lifestyle and financial goals and strategies.

In other words, it’s not something you do on a whim. Given the stakes, get all the advice you can.

Nonprofits like InCharge Debt Solutions have certified counselors who can help prepare you to take the single-income plunge. Millions of households have successfully done it.

If you go about it the right way, yours can be one of them.