Liz officially quit her job to be a stay-at-home mom! We’re now living off a single income. Well…sort of. Honestly, I’ve been prepping for this moment since before Liz and I even met.
I made up my mind already in my early 20s. I knew that if my future wife ever wanted to stay home to raise our children, I would be fully on board. But what’s the one thing that holds people back from doing this? Money of course!
Here’s what we’ve done to make staying at home possible for my wife:
- We got out of consumer debt
- We started socking 15% of our income in our 401k
- We paid off our house
- We set up automatic contributions into our HSA account for future medical emergencies
- We developed multiple streams of income (online income and real estate income)
You might look at this list and say, “We can’t do all that! If that’s what it takes to live off a single income, we’re screwed!” Keep in mind, this isn’t the master list for everyone. This is simply what worked for us and provided a cushion for us each month. Realistically, much less can be done to achieve a single income household.
7 Ways to Start Living Off a Single Income
So how can you make living off a single income possible? Based on my experience and research, there are at least 7 things you can do.
No matter what you do at work and no matter what you earn, you can always make more. Just think, if you currently earn $40,000 and your spouse earns $25,000, couldn’t you shoot for earning $65,000 in just a few years and have your spouse stay home with your children?
It’s definitely not rocket science. Just simple math.
To pull this off, you might have to plan on:
- Working longer hours for a while
- Taking a few classes or getting certified
- Finding a mentor that will guide you to a new level
- Becoming impressive to those you work for, day in and day out
If you don’t think you can get promoted at your current employer, don’t be afraid to hunt for work elsewhere! It will likely lead you to a better paying job and maybe even a more employee-centered company!
2) Develop Multiple Streams of Income
Trying to support an entire family on a single income can certainly be tough, which is probably why only 7% of the U.S. population does it. But what if one of the spouses could stay home and the family still has two, three, or even four sources of income? It almost doesn’t sound feasible, but it can certainly be done!
According to The Huffington Post, there are eight great ways to create passive income streams. Here’s a few of the more promising ideas:
- Start your own website and sell other company’s products for affiliate earnings
- Start a freelance business like becoming a photographer or web designer
- Start a network marketing business for a product that you love
3) Become More Frugal
If you want to start living off a single income, you’ll probably have to cut back on the budget a bit. Here’s some quick ideas to cut your budget by 10%-20% immediately:
- Shop at discount grocery stores like Aldi and Save-A-Lot
- Cut back on dining out. Once a week is plenty sufficient.
- Begin carpooling to work
- Cut down on energy costs by programming your thermostat and reducing the temp on your hot water heater
Without the proper savings, everything becomes an emergency.
- The tire blows on your car…
- The furnace stops working…
- The kids all need new clothes for school…
…all of these things are supposed emergencies….when you have no money.
What if though, you had $10,000 in the bank? Suddenly, all of these events don’t sound like such a big deal. No longer will you need your credit card to cover them (which means you can stop paying that stupid interest), and you can then build back the emergency fund quite quickly afterwards.
Do you realize what else this means? With a proper emergency fund, you can get a little smarter when it comes to your car and home insurance as well. By increasing the deductible on your insurance, you can easily save thousands of dollars per year! This is one of the major reasons the rich get richer. They earn more so they can spend less!
5) Change Your Definition of Fun
What does fun currently mean to you?
- Going out to a new restaurant?
- Visiting the craft pub with friends a few nights a week?
- Renting a cottage on the lake twice a year?
Admit it. Spending money is pretty easy. If you asked me to spend $10,000 over the weekend I could do it without breaking a sweat. Hop on a plane to Florida, rent a house on the ocean for two nights, rent some sports cars…. annddd I probably already overspent my $10k allowance.
If you want to start living on a single income, you’re going to have to change your definition of fun. It’s as simple as that. No longer can you carelessly spend money each weekend and wonder where it went. If you want your spouse to stay home with the kids, you’ll have to put on your big boy and big girl pants. It’s time to plan your spending and entertain yourself cheaply.
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I hear it all the time from women at work:
- “I desperately want to stay at home with the kids, but my husband told me I have to work.”
- “There’s just no way to live on a single income these days.”
Before you feel sorry for these folks, the reason for their inability to stay home was themselves.
One of the couples was building a new $600,000 home of their dreams (at the age of 30…), and the other couple owned a $300,000 home with a brand new truck, SUV, and a boat. Both of these families earned well over $150,000 a year, but somehow “couldn’t possibly live on a single income”…. Doesn’t that just make you sick?
These couples couldn’t make the numbers work because they had debt up to their eyeballs – both with their homes and with their cars. If they would just downsize both of those liabilities, they could easily start living off a single income.
7) Develop a Written Plan
Living off a single income can be quite stressful – especially for those that have no idea if the numbers will work out! But, what if you followed the advice above and made a plan to..
- increase your income,
- live on less,
- build a hefty emergency fund,
- and maybe even add some other income streams?
It would make life a little easier wouldn’t it? If you’re serious about living off a single income, write down your plan and decide together with your spouse that it’s what you want to do.
Want to know more about how Liz and I started living off a single income? Ask in the comment section below!
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.