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How to Survive a Loss of Income

In 2012, my husband and I both worked full-time with no children. By 2014, we were a family of four living on a single income of less than $2,000 a month. It wasn’t an easy time for us, but I’m going to share with you the lessons we learned and applied to help us make it on our own two feet. By the end of this article, you will have a clearer understanding of not just how to survive a loss of income, but how to thrive afterward.

7 Ways to Survive a Loss Of Income

In the following steps, I’m going to outline what you can do today to prepare for a future income loss or how to survive a current loss. Many of the techniques my husband and I used were lessons we learned from Dave Ramsey’s Financial Peace University. Whether or not you follow all of Dave’s methods, I can speak from experience that this information saved our family from greater stress, anxiety, and even desperation.

I’m not here to sell you on Financial Peace, though. So let’s get started with our list.

1.  Don’t let an emergency sneak up on you unprepared.

I almost called this step, “Don’t let an emergency pull your pants down” because that’s how it feels, doesn’t it? According to a recent Bankrate survey on Forbes, “63% of Americans don’t have enough savings to cover a $500 emergency.” To truly survive a loss of income, you’re going to need far more than that.

  • First, acknowledge that no matter how secure you feel, your source of income is not 100% fixed.
  • Second, designate a savings or money market account at the bank for emergencies only and agree that you won’t touch it.
  • Third, save at least $1000 as fast as you can.

Recommended Reading: How to Start an Emergency Fund from Scratch

survive a loss of income2. Practice living on one income ahead of time. 

One of the biggest triumphs that came from our first year of marriage was when my husband and I began living on less than we made. SO much easier said than done. As singles, we both did what we wanted and never had much left over in the bank to show for it. Debit and credit cards were my favorite vice. Along with the $5 DVDs at Target.  ::sigh::

After we attended Financial Peace University, we started to budget together and make a plan to knock out our $22,000 of debt in two years living on a combined $48,000 income. We used my husband’s paycheck for expenses and slowly put more and more of my check toward debt. One day, we took a leap of faith and sent the whole thing to our creditors. It stung to see the fruits of my labor vanish, but our debt melted away.

3. Eliminate as many monthly payments as possible.

Whether you’ve lost an income already or you’re preparing for the possibility that you’ll have to survive a loss of income, this is such a good step to take for any financial goal. Simply put: Eliminate debt. When we were living on one income and getting out of debt, we dumped our smart phones, rode bicycles or walked where we could, ate at home more often, and tried our best to use cash to track our everyday spending.

Getting out of debt dropped our monthly payments dramatically. We were able to build up our emergency fund much faster and save up for both of our children’s hospital delivery bills in cash (thereby receiving a 20% discount for offering to pay in full at the time of delivery). By the time the four of us were living on less than $2,000 a month, our expenses were in a manageable place where we could keep the lights on, fill up the gas tanks, and keep everyone fed.

survive a loss of income4. Calculate how much you NEED to live on each month.

Knowing how much you make each month is very different than knowing how much you absolutely need to live on each month. Dave Ramsey refers to this as the “four walls.”

  • Food
  • Shelter
  • Clothing
  • Transportation

Everything after that is a luxury if you must survive a loss of income. Shelter includes utilities, but not cable. You have to have water and electricity, but you don’t need HBO. Clothing is essential to have, but not essential to continually upgrade or replace. Transportation is vital to get to work, but a car payment on a new vehicle is not.

Once you’ve calculated what you realistically need to live on each month, circle and memorize it. That number will help you in three ways:

  1. It will help you calculate your emergency fund. For example, multiply it by three to see what you need to save to cover three months’ worth of living expenses.
  2. It helps you stick to a clear number (or to send you a wake-up call if you’re spending way over that).
  3. It helps you know what you’ve absolutely GOT to earn while you look for work.

5. Remember that this is temporary.

If you have to drive an Uber car or babysit or deliver pizzas while you look for a job that is “more respectable” in your eyes, then bravo. Do what you’ve got to do to feed your family and protect the “four walls.” There is absolutely no shame in that. It’s temporary.

survive a loss of income6. Don’t undervalue the long-term effects of patience and contentment.

The daily choice to say “no” to a richer lifestyle or more luxuries as we worked toward our financial goals had a long-term effect on our marriage. It stuck with us even after my husband’s new position at work nearly doubled his income last year. It stuck with us even after I started making money from home as a freelance writer.

Sure we relaxed in some areas, but our emergency fund did not go ignored. Nor did our house fund.

One quick shout out to my husband: My biggest lesson of empowerment through contentment came from watching him unceasingly give 10% of his paycheck to our church every payday. Even when we were getting out of debt or when we had as low as $1,600 some months to cover rent, utilities, groceries, fuel, diapers, and everything in between, the very first thing my husband and I did with our budget sheet was calculate our tithe and list it at the very top.

I can’t say I would have been as diligent as he. But we never once went hungry and we never once looked back and regretted our choice. Even though we had to survive a loss of income through that time, there was empowerment in the ability to choose what we wanted to do with our money. I’ll never forget that.

Your Turn: What ways do you think people should prepare for the loss of an income? Tell us in the comments below!

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AUTHOR Derek Sall

Derek has a Bachelor's degree in Finance and a Master's in Business. As a finance manager in the corporate world, he regularly identified and solved problems at the C-suite level. Today, Derek isn't interested in helping big companies. Instead, he's helping individuals win financially--one email, one article, one person at a time.


  1. I think it is imperative to have the budget you use when things are going as planned and another budget of necessities only. I am a contingent employee and my income can fluctuate wildly. Getting my financial house in order definitely helps with this.

  2. So wise, ZJ, seriously. I think any diligence before an emergency or crisis happens is imperative. I stunk at that back when I felt invincible (and broke, haha).

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