Living on one income is often a difficult prospect for many families, especially when that one income is just above federal poverty guidelines for the average American family. A $25,000 per year income is not much. It’s not a livable wage for most people, but there are some who can make it work. In fact, there are some people who haven’t the choice but to make it work for the sake of their families and their survival. For others, it is a choice. Perhaps you have a higher income, but you want to stay home with your kids. I see it all the time on social media; families without much income who decide one parent will stay home with the kids.
It might not be a choice everyone is willing to make, but it’s one that allows for these families to become quite creative, thrifty and frugal. For them, priorities lie in other aspects of life, such as their kids, their personal needs, perhaps their overall health. Whatever the situation, it’s entirely possible for a family to live and survive on an income of only $25,000 per year, whether by choice or not by choice. One woman recently wrote about her experience living with her husband and their son on a $25,000 income after she left her job due to health issues. She’s learning as she goes, and she’s figuring out how to make it work; and it’s worthwhile to take some of her advice and apply it to your own life. Even if you have more disposable income than her family, it might help you to save more – and there is never anything wrong with saving more.
Create an Emergency Fund
Here’s the deal; if you’re going to live on an income that literally forces you to live paycheck to paycheck and without much of a cushion at all, you have to have an emergency fund. There is no way to live on an income like this without one. The good news is that right now is probably the best time to create an emergency fund; when you’re living on an income this low, chances are exceedingly good that you qualify for a number of tax deductions and credits that cut your tax liability to next to nothing, which means you’ll get some sort of federal income tax refund (not everyone, since circumstances might prohibit that for some families). This is a great way to create an emergency fund by putting your refund into savings.
This allows you to rest a little easier, put away another $10 a month if that’s all you can afford to put away to increase your savings and know that if your car breaks down, your air conditioner stops working or there is some sort of emergency, you can afford it. An emergency fund is something that everyone needs, no matter their income. However, without any disposable income, it’s more important than ever. It’s also important to continue contributing to it once you have it.
No More Impulse Purchases
Just this morning as I was sipping my coffee and perusing the internet after showering and working for an hour, I saw this great skirt that I thought I’d love to wear to church on Sunday with a pair of my favorite heels and this new blouse I ordered last week. So, I bought it; and then I paid for expedited shipping to ensure it arrives in time for me to actually wear it to church this weekend. That, my friends, is called impulse shopping. I have a problem with that, I know I do. This family has decided that in order for them to live on a $25,000 budget every year, this has to stop for them.
This family made the decision to cut their impulse spending in a way that is actually really amazing; they threw away and donated a bunch of things they already had around the house that they felt created more work for them in terms of keeping the house in order and maintaining the level of organization they love. As an anti-stuff person who keeps nothing (I mean, if my husband can’t find a tool or one of his shoes or one of the twins, every single person in our house and in our lives begins joking that Tiffany must have thrown it away…that’s how much I hate stuff and clutter and things).
When you make the decision to clear out the clutter in your life, you feel no need to add more – and that’s a great way to cut your random impulse shopping habits.
One of the biggest expenses in my family’s life is our grocery bill. I admit right now that I spend entirely too much at the supermarket, regularly. I can try and try, and I can’t seem to cut that bill in any way – so apparently it’s not that important to me. One way that this family chooses to spend their monthly grocery expense is by eating a healthy diet that doesn’t result in much waste. Meal planning and a twice a month shopping trip is her new plan. She plans out all their meals for two weeks, buys what she needs, makes it work with what she has and she’s managed to cut her grocery bill in half since applying this lesson.
She’s also using the cash method. It’s a good one, too. I know that when I head to the store for the 8th time in one week to pick up ‘just one thing,’ and end up spending $75 on who even knows what, I wonder why I don’t use the cash method. In fact, I think I’m going to challenge myself for a month to try this. Take enough cash to the store for what you need and nothing else. This way, you haven’t a back up method so you can’t pick up additional items and pay for those, too. It’s a genius way to stop yourself from spending too much at the store and wrecking your budget.
Another way that this family has cut spending is by deciding they won’t eat out much. Medically speaking, the wife suffers from anxiety and depression that makes it difficult for her to always function enough to make dinner for her family. Because of that, they spend some time picking up dinner out, and that’s a budget-buster. Their family tries very hard not to dine out unless they are able to sell plasma during the month so that they can use that cash to eat out and not deprive themselves of their favorite meals. However, she’s been using an interesting method now that her depression medication is working more effectively and she’s able to function a bit more regularly without the debilitating effects of her illness. She’s got a small index card on her family’s fridge that reads, “Today I decide to be wealthy,” which she finds motivates her to get up and handle her family’s meals and other daily tasks so that they don’t spend unnecessary funds dining out.
You don’t have to worry that your family can no longer have any fun when it comes to cutting back your spending and learning to live on a very small income. In fact, you can have just as much fun as you did in the past, but you have to get creative. Go to breakfast for a date instead of dinner. Redeem credit card points for travel or gift cards so you can have a bit more fun. Buy tickets to events when they are on sale through Groupon or Living Social. Visit the museum when the cost of admission is lowered during the evenings or on the weekends, or on the days when they offer free admission. There’s always a way to have fun without spending any money.
Perhaps the thought of living on one income scares you, no matter how much or how little that income is. There is one thing that you might not yet realize, though; and that’s how much you might actually save by only having one working adult in the house. Yes, that’s right – save. I often joke with my husband that we’d probably save a lot more if he didn’t work since he spends so much traveling to and from work in gas and on breakfast, coffee, lunch and other things that he purchases throughout the day. He spends excessively on those things, and it’s a running joke for us.
But, it’s actually true for many people. This family, for instance, immediately saved more than $300 in the first month that the wife was not working because she was not stopping everyday for breakfast, coffee and lunch. That was a huge savings for them, and it made a big difference in their budgeting. The lesson to be learned here is that cutting back on your current lifestyle is not always as drastic as it might seem when you lose one income – assuming you’re not losing a significant income. I’d assume that going from earning $100,000 per year to $25,000 per year might make a much larger difference in your lifestyle.
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