Strategies for Living on a Single Income

Life can be expensive. This is just a simple fact when you add up all your monthly expenses versus your income. Your biggest expenses are obviously going to be your rent or mortgage, car payment, insurance, utilities, and grocery bills. You may even have student loans you are still paying off. That doesn’t even include all the fun stuff you want in life like that daily coffee run, a new pair of shoes, or going to the movies. When you're living on a single income it can be easy to let your wants and needs eclipse what you're making at your job salary-wise, especially if you also have a family that you're supporting.

This can cause many people to rely heavily on credit cards, sinking you further and further into debt you don't want to deal with. So how can you successfully live on a solo income and make sure you are covered financially?

All it takes is some smart planning and budgeting to get you started. Here are some beneficial strategies for living on a single income. These tips work for anyone who lives alone, is living solo after a divorce, or even for a family who is relying on just one income.

Strategy #1: Create a Solid Budget and Stick to It

Easier said than done, right? Creating a budget is step one to understanding how your finances and spending are going to work each month. Outline all the specifics of what you need to pay each month and leave a little wiggle room for miscellaneous expenses. This amount needs to be below what you're making every month to cover all of your expenses and not sinking yourself into the red.

Sticking to your budget takes dedication and hard work. It can be easy to let yourself slide into too many nights on the town or buying little extras that you might not need. Being financially responsible, especially when you have just one income to count on, takes practice. It’s not going to be perfect all the time (you’re human after all), and money is just a task in your life that absolutely needs to be mastered over time.

Strategy #2: Save Money Where You Can

This might mean looking into having a roommate to cover half of your living expenses if you live alone and don’t have a family to look after. This can be especially helpful if you live in a big city where the cost of living, rent-wise, is pretty high. Having someone share those household expenses can lift a big financial burden off your shoulders.

Strategy #3: Have an Emergency Fund

Having an emergency fund is crucial in case you get sick or lose your job. This emergency fund is usually around 3-6 months of living expenses that you can turn to, if needed, in a pinch. Hopefully you won’t have to, but it’s important to have this cushion in the event something happens where you aren’t bringing in money for a few months.

Strategy #4: Don’t Over-Extend Yourself

Ever heard the expression living beyond your means? This is easy to do when you begin to take on a higher rent, mortgage, or car payment that may seem reasonable at the time, but doesn't make sense when you look at your spending-to-income ratio.

For example, in general, your rent shouldn’t be more than 25 percent of your gross monthly salary. If you need this calculated for you, there are “rent affordability calculators” that can help calculate. A housing wage calculator can help you estimate how much you need to make to afford a certain rent or mortgage level. It can be very helpful to see this in a solid number figure, instead of trying to work out whether you can swing it by speculation alone.

Strategy #5: Use Credit Wisely

Using credit wisely when you're working with a sole income is difficult. With one income, it can be tempting to rely on credit cards to get you the extra things you may want, but don’t exactly need. Getting into debt is something you should avoid at all costs. You’ll end up, in the long run, racking up interest on credit card debt that can make it hard to pay off alone.

If you're struggling to figure out how to best manage your finances living on just one income, it may help you to consult with a trusted financial advisor who will be able to set you on the path to living well and managing your finances the right way with just one income. Escient Financial is here to help you with that, so feel free to...