Are you a parent juggling a career and raising a family in America?
Society says you have to have a successful career as if you don’t have children to raise. And at the same time, it expects you to raise healthy, well-rounded children as if you don’t have a career.
If you can afford it, maybe you’ve thought about going down to one income.
It’s a scary thought! People don’t just leave a career to be a stay-at-home parent! No one does that in America!
Can you support more people with less income?
Military families are often defaulted into being single-income families for many reasons.
How is it even possible to live off of one income?
You can! It starts with being frugal.
Can frugality make you rich? No!
Can you build wealth even on just one income? Yes! Frugal habits have a significant impact on building wealth.
Military families can do this too. The income may be lower, but it is still possible.
How do you do this?
Here is the ultimate checklist on how to live frugally on one income to build wealth.
Do these things before living frugally on one income
Have a hefty emergency fund
According to a CNBC article, less than four people out of 10 have enough savings to cover a $1000 emergency expense.
Have at least six months’ worth of expenses in your emergency.
How much to save depends on several factors.
How secure is your job?
How much money makes you feel comfortable at night if you were to lose a job tomorrow?
Make multiple sinking funds. Predict significant expenses that will come up eventually and allocate money towards them.
Sinking funds can be for car maintenance, traveling, or house repairs.
Park your emergency fund in a savings account. It will not accumulate as much interest as it would if it’s invested, but that’s not the point.
Emergency funds must be easily accessible in the event of an emergency.
Beef it up until you feel good about the number. This is different for everyone.
Our monthly expenses are very low, but we have one year’s worth of expenses in savings simply because it makes me feel good and safe.
Related Post: Why Sinking Fund Categories May Be the Best Thing for Your Budget
Pay off your debt or have a plan to do so
Having debt payments means that you are not able to put as much money away for the future.
Part of building wealth is getting rid of the debt and staying out.
Two ways to pay off debt include the snowball effect and the debt avalanche system.
The snowball effect is paying down debt from the least to the largest amount. Once you paid off the least amount of debt, put that money towards the next debt.
With the avalanche system, you pay the minimum amount on everything and put an extra amount on the debt with the highest interest.
It doesn’t matter which one you do as long as you like whatever you are doing and it keeps you motivated.
Everyone has their preference of which method works best, so do what works for you.
Pay off debt as soon as possible and as fast as possible.
Before Mr. iFI and I got married, we each worked on our debt before combining our finances.
Create a budget with one income
Budgeting is key to living on one income.
People need to know where every dollar goes because there is less money coming in.
Make a list of all your expenses.
Can you live off of one income with the expenses you currently have?
You need to know if living off of one income is even possible.
Before moving down to one income, we lived off of my husband’s income and used my income for investments, traveling, and play money.
Related Post: Purpose of Budgeting and How to Use It to Your Advantage
Live on one income and see how it feels
If you can prepare for living on one income, practice it for several months before actually doing it.
This allows you to see and feel what it is like living on one income.
What is your quality of life like?
Is it a sustainable change, and is everyone happy?
Can you live frugally on one income?
Now is the time to make some changes to your budget or lifestyle so that living off of one income is sustainable.
We were already living off one income for 1.5 years before actually making the big move.
However, we didn’t practice living on it and had to re-evaluate our goals and priorities frequently.
13 ways on how to live frugally on one income
1. Prioritize ruthlessly
Paula Pant from Afford Anything says, “You can afford anything, but not everything.”
Families are not equal, so no two families will have the same budget, goals, or lifestyle.
Figure out what works for your family.
If there is one thing you need to read in this whole article to change your life or enhance your ability to frugally live on one income, it’s these three things:
- Name what matters
- Identify your family values
- Be grateful and content
Naming what matters tells you where you should spend the most time and money on.
Every child needs education but does going to a private school matter more than going to a public school?
Make a list of the top 10 things your family values and spend money on those things.
Ask yourselves what your family values are?
Do you value big family vacations, or do you value having your kids participate in competitive sports?
Practice daily gratitudes with your children, and each of you say out loud what you are grateful for.
It will show you all the big and small things you have in life. The awareness will grow your contentment.
Once we started focusing on these three things, our lifestyle changed from pinching pennies to being content and enjoying the things we already have.
Instead of saying, “We can’t afford that,” we say, “We don’t value it enough to spend the money.”
2. Decrease these significant three expenses (housing, food & transportation)
Housing is one of the most significant expenses in the monthly budget.
This includes mortgage/rent, repairs, and maintenance.
Ask yourself if you need a 2500-3000 sq ft house.
Downsizing your home means smaller monthly bills.
Do you need to live in the best neighborhood? Living in the best community comes with a costly mortgage, and the neighbors are the Jones’.
In our last base in England, we opted for an 800 sq ft flat (2 adults and an infant living there) to be in an ideal location with parks, grocery stores, and restaurants within walking distance.
The rent was well below our housing allowance. The extra amenities mattered to us, and space did not.
Food costs are another major item affecting a family’s budget.
This includes grocery shopping, household shopping, and eating out.
There are many ways to cut down on food. It includes:
1. Meal planning
2. Stock up when things are on sale
3. Food pantry (Military tip: If you are a certain rank, you can get free food items donated by the community)
4. Limit grocery store visits to limit spending
5. Make a list beforehand and stick to the list
6. Do not go grocery shopping when you are hungry
7. Limit eating out to 2-3 x a week, including weekends
8. Plan on cooking at home (have ingredients ready)
9. Have easy meals on stand by for those times when you are lazy and tempted to eat out
10. At the end of the month, shop in your kitchen and eat what you have.
We can keep our grocery and household shopping to $800-$1000/month for a family of 4, depending on what we need.
Most families in America need two cars to function.
Transportation expenses include auto loans (if you have one), gas, and maintenance.
Is your car paid off? If not, pay it off as soon as possible.
If you are looking for a vehicle, always buy used.
To save gas, batch up errands on your errand day.
Also, challenge yourself for one weekend a month not to drive.
Cars in Japan for foreigners are relatively cheap. Ultimately, we only need one car.
However, we have two cars because we are in an excellent financial situation and can afford the convenience.
3. Decrease recurring bills
Monthly recurring bills include utilities, internet, tv, cell phone bills, and insurance.
- Utilities: Unplug electronics that you are not using and keep your thermostat at a temperature that decreases utility bills.
- Internet: Shop around for providers that work well in your area and always compare prices.
- Cable: Cut the cord. There are cheaper options such as Netflix, Hulu, and Amazon Prime.
- Cellphone: Consider smaller cell phone companies. These companies share the same cell towers with the major phone companies which provide similar quality services. Also, look at how much data and minutes you are using and opt-in for a smaller data package which equals a smaller bill. Lastly, stop upgrading your phone every two years.
- Insurance: Shop around for providers and get quotes from at least three different providers.
We live on a military installation, so utilities are essentially free. We have been cable-free since moving overseas in 2015 and lived with Netflix the entire time! For our cell phone plan, we use a smaller company and pay $80 for two lines. We do not have a lot of flexibility for cable and insurance since we are overseas.
4. Do not buy things just because they are on sale
Buying things because they are on sale is cheap, not frugal. Ultimately, it costs money.
It may sound counterintuitive, I know, but hear me out.
Ask yourself if you need the item despite it being on sale. If it was not on sale, would you buy it?
Stores put things on sale as a tactic to get people to buy them.
People feel good knowing they saved money. However, the advertised sale could have just been a regular-priced item.
If you bought something because it was on sale, but you weren’t going to get it in the first place, you just spent money that you could have kept.
Do not let the sale price drive you to buy it.
I used to buy my kid’s next size-up/seasonal clothes in advance during the sales, thinking I was being proactive and saving money.
But I just ended up with too many clothes in the same size because I would forget what I bought and just spent money.
5. Find free/cheap activities to do
Kids do not always need costly forms of entertainment (amusement parks or indoor play areas).
Parks, local events in your community, and play dates at a friend’s house are some ways to do free things while being able to socialize.
Kids love being outdoors and exploring, so look for nature trails.
For birthdays or Christmas, if grandparents ask for gift ideas for the kids, then ask for experiences such as yearly passes to a museum, zoo, or amusement park.
Our local area has many free/low-cost parks or shrines around us to explore. Japan has many places to go to with cheap admission and parking that are free for families to enjoy all day.
6. Challenge yourself not to spend any money one weekend a month
Planning not to spend money one weekend a month means saving money.
It may take a bit of planning to do since you also do not want to be in the house and feel miserable.
Plan to go on a picnic at a park with homemade food.
Plan it on a day where your kids have something going on like a sports event or birthday party so that everyone is occupied for several hours,
Find a local festival to visit.
We enjoy challenging ourselves to do this. We have boring (aka relaxing) weekends, especially during expensive months like Christmas or birthday months.
Related Post: How to Master No-Spend Weekends Now to Increase Wealth
7. DIY minor things
Things get broken, but not everything needs a professional’s touch.
Before going to a professional, see if you can do it yourself. With Youtube and Google, you can always google how to fix something.
Some things to DIY include car maintenance, cutting hair for boys, home maintenance such as housekeeping chores, doing your lawn care, and washing your car.
Luckily, Mr. iFI is pretty handy, so he attempts to DIY something before going to the professionals.
8. Buy generic when you can
People can be brand loyal, and it can be costly.
Some generic items have the same ingredients as the expensive brand items.
Always check the ingredients and compare prices before buying.
We are not brand loyal people, so we compare ingredients and prices on almost everything.
If there is a cheaper brand, we make the switch. However, if we tried the cheap brand and did not like it, we buy the expensive stuff.
Name what matters!
9. Continue going on vacations but do it cheap
Vacations allow people to relax.
It gives families something to look forward to and escape the everyday routine of cooking and cleaning.
Go somewhere you can drive to that’s several hours away and spend the weekend there.
Rent an Airbnb, so you have a place with a kitchen to cook meals and make your coffee.
Bring foods to cook or snacks from home so you can buy less food while on vacation.
Find free things to do and avoid tourist traps. Enjoy the simple walks in a new city. Look for free walking tours.
Don’t feel the need to buy a souvenir to remember the trip because that’s what memories are for!
We do all these things and continue to vacation at least 3-4 times a year.
All our trips are booked several months in advance, so there is always something to look forward to.
10. Use credit card rewards
Some credit cards give rewards for using it, and it gives a percentage back in the form of cashback or points. It is essentially free money.
Make purchases on a credit card to accumulate points. Use the points to make future purchases.
There are thousands of different kinds of credit cards out there.
There are best credit cards for students, cashback, traveling, military, no annual fees, etc.
Identify which one will best suit your needs and pay it off in full at the end of the month.
If you are already responsible with money, do this. If not, don’t do it. Just like money, credit cards are a tool so use them wisely.
11. Use a cash system if you need to
The infamous “cash is king” quote comes to mind. It is true.
Sometimes no matter how good you are at tracking the budget, you can still go over it.
An alternative to this would be using cash for purchases.
Look at your budget and see how much cash you need for groceries, having fun, gas, etc.
If you get paid every two weeks, take out the amount of money you foresee yourself spending in the next two weeks and divide them into envelopes with their respective category.
Once the money in the envelope is gone, that category is closed until the next paycheck comes in.
We were on an all-cash diet for 2-3 years.
Being overseas with different currencies (we use both local currency and USD) gets complicated, so we decided to start using credit cards and take advantage of travel rewards points each year.
Related Post: 5 Disadvantages of Budgeting You Want to Know About and What to Do
12. Identify your needs vs. wants
Needs and wants are very different.
But depending on their priorities, people rationalize and create a blurry line between needs and wants.
Needs are necessities that need to be bought or paid for to survive.
Food and housing are a necessity.
Wants are things that you don’t need to survive, but you still want them anyway.
Some people believe that children need to be busy playing sports, despite the costs, so they don’t get into trouble.
Before buying something you want, wait, and put it in the shopping cart to save it.
Take a week or two to think about it. You may even forget how much you wanted it.
When we had our first kid in 2017, I did not go overboard with him. But I still bought things that I thought he “needed” to grow developmentally.
When my second child came in 2019, I changed my perspective and my habits.
I had a better handle on my needs vs. wants and downsized the more kids we had.
13. Reduce, reuse and recycle
Being frugal unconsciously improves the environmental impact.
Frugality naturally leads to reducing, reusing, and recycling things as much as possible.
Shop at thrift stores or utilize your local Buy Nothing Groups or Freebies groups on Facebook.
People are always getting rid of things in perfect condition so they can upgrade.
If you know you will need specific items in the next couple of months, look for them ahead of time.
Ask for things on the Buy Nothing Facebook groups to see if anyone is getting rid of what you are looking for.
People want to pass along their items to people that want them.
Kids outgrow clothes very quickly. Shopping at thrift stores saves hundreds of dollars.
Consider a capsule wardrobe for your kids.
Get clothes that you know your kids will like so they will want to use them.
This strategy allows us to live frugally on one income while still building wealth.
Most of my children’s clothes are hand-me-downs or used clothes.
We received toddler hangers, children’s tables, books, and many toys from multiple Buy Nothing groups.
Pros and Cons of frugally living on one income
There are many benefits to living on one income, but as with anything else, there are cons as well.
The benefits of living on one income mean one person can be at home with the kids and not worry about who is calling off when a baby is sick.
It is also much easier to plan something around one schedule than two.
However, money is limited when on one income.
Living on one income also dramatically limits your income potential for the duration when one person is not working.
It impacts your overall goals, net worth, social security benefits, and earning potential for the future.
Do not decide to live on one income lightly, especially if you want to pursue Financial Independence.
It was a tough decision for me to be a stay-at-home mom.
However, we leaped into the decision and did not consider all the potential earnings and growth we will be missing out on.
It was more of a “Can we afford to go down to one income right now?” vs. “How much are we losing because we are on one income?”.
Related Post: Life-Changing Ways to Avoid Frugal Fatigue
You CAN be happy living frugally on one income
Living frugally on one income is hard. It has its challenges. And it takes commitment from the entire family.
But it’s worth it if it matters to your family. Name what matters!
Focus on big wins that have a significant impact, saving on housing, food, and transportation.
Name what matters!
It doesn’t matter if you spend $20 on a fancy salad dressing bottle that you love and can’t give up because it makes you happy.
Your quality of life still matters, even if you are frugal.
Know what your needs and wants are. You don’t need to have everything.
Sometimes people want everything, and everything will never be enough.
Be grateful for what you have, and contentment will follow.
You can choose to be happy with the things you have. Happiness is a choice. Know your family values.
Being able to live off of one income is truly a privilege.
We are a privileged military family living overseas. We have been frugally living on one income for four years now.
Our net worth has doubled as well as our family size since we started our family.
We are living proof that it’s possible to frugally live on one income and be happy.
Being a one-income family is a personal choice for each family. There’s no right or wrong way.
But if you’re going to live off of one income, do it right and live frugally to build wealth.
Imagine being able to not only build wealth for your future but also for your kid’s future with one parent being there every step of the way.
You will not look back at the end of your life and wish you worked more.
It’s not going to be easy, but it will be worth it.
You and your family can do it.
Are you ready?
You, too, can live frugally on one income!