Wondering why people choose to live on a single income? Sometimes it’s all about saving for a big financial goal; other times it’s simply wanting to live with less. Take our credit counseling advice for living on one income to meet your financial goals.
If you have one income, strategize a plan to pay off debt.
Creating a One Income Financial Game Plan
Living on a single income is not easy. It requires you to think differently about your money and how you spend it. However, it can be an incredible and effective way to reach your goals! Here are a few financial goals or reasons people might choose or need to live on less:
- Bankruptcy and credit card debt
- Saving for a down payment
- Pay off a car loan
- Learn to live with less
- Save for travelling
- Stay-at-home parent
- Build up retirement savings
- Saving up college funds for the kids
- Starting a small business (bringing in no initial income)
- Illness or death
- Student loan debt relief
Starting Steps for Living With One Income
Now that we have a few reasons, let’s take a look at the starting steps behind this process. Everyone’s journey will look differently. Consider these steps as you examine your individual financial needs.
- Create a current household budget with both incomes (if you have a partner that has an income, but if not, skip this step).
- Identify categories that you know can be reduced.
- Next, create a working budget with just one income.
If you are voluntarily using just one person’s income and can’t make ends meet, use some of the other person’s income. Remember, the more you can save the better and faster you will reach your goals, like credit card debt payoff. However, it’s okay to not sacrifice everything.
If you aren’t doing this voluntarily, then there are some hard questions to face. Here are some things to consider to free up as much money or time as possible.
- Can you reduce your mortgage or rent by downsizing?
- Trade in or sell your vehicle?
- Ask for a promotion at work if one is deserved.
- Would you qualify for any assistance programs?
- Can you work a part-time job or side gig and still accomplish your goals of staying at home most of the time?
- Are there any insurance plans you can reduce?
- Have you eliminated all luxury items- including cable and Internet at home?
- Is it better to wait a few months before diving into this new arrangement?
As you consider living on one income, think through how long you intend to make the switch. What’s your comfort level and what’s best for your family? It’s great to accomplish big goals, but don’t go too fast and burn out.
If you’re struggling to pay off debt, ACCC can help. Schedule a free credit counseling session with us today.
