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10 Tips On How To Live Well Even With Only One Income

10 Tips On How To Live Well Even With Only One Income

In an age of so many dual-income families, is it really possible to live well on just one income?

Absolutely! Trust me, I know. We are a family of six, living on one income–a military income. After I enlisted in the military, we decided it would be best for my wife to stay home with the kids; that’s when we made the transition. Now we are happily a single-income family. I’m going to show you how we do it, and how you can too.

Why one income?

Families go to one income for all kinds of reasons. You may want one of you to stay home with the kids. You may have calculated the cost and realized it cost almost as much as one of your incomes in daycare and travel expenses for both of you to work. You may want to live a more minimalist lifestyle and focus less on earning more money. Or you may not be a single-income family by choice. One of you could have been laid off, but the good news is that you can live well on one income–it could have been a blessing in disguise.

No matter your reason, here’s how to make it work:

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1. Stick to the plan

Planning is everything. You can live on almost any income if you budget and make a plan for every dollar. And it can become fun to see how far you can stretch it. So what does this mean?

  • Set a budget. Yes, you need a budget. If you have one, stick to it. If you don’t have one, it starts simply by tracking your purchases for a month, then setting each category. See where you can cut back. If you’ve recently became a single-income household, you may notice that you’re spending much less.
  • Plan your meals. Meal planning is huge. You should know exactly what you’re going to buy when you walk into the grocery store, and you should know exactly what you’re going to make out of it. It’s surprising how much food we all have in our homes that we don’t eat because we don’t have a plan for it.
  • Plan your vacations. If you go on an annual vacation, you have an entire year to save for it. Figure out how much you’ll need ahead of time, and divide it by 12 months to get a monthly amount to save. Vacations don’t have to cost a lot; our family usually spends less than $500 on each vacation we take.

You’ve heard “if you fail to plan, you plan to fail” and this couldn’t be more true in your finances. You’ll be amazed at what you can afford if you plan. Joshua Becker says, when it comes to purchases, “ask when and why, not if”. Even on one income there doesn’t have to be trade-offs, but it is all about timing and planning.

2. Spend based on priorities

Are you trying to keep up with the Joneses? You shouldn’t be, because the Joneses are broke. Don’t make purchases to impress others, make purchases based on your priorities.

If you truly value family above materialism, do your purchases reflect that?

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This is an important question for all of us to ask occasionally. It’s easy to get caught up in the consumerist mindset of earning more and spending more to be happy, but that’s a lie. Rich people aren’t any happier than the rest of us. There’s nothing wrong with having more money, but make sure your spending is lining up with your priorities. Just spend an extra few seconds thinking about each purchase to decide if you really need it. You’ll be surprised how often you don’t.

3. Cut the cable

Speaking of priorities, where is TV on that list? We cut the cable over five years ago and haven’t looked back since. We spend more quality time together as a family. We spend more time reading, which has led to much financial success (finance books are my favorite). There are a thousand reasons to cut the cable, and I have yet to find one good reason to keep it. If you must watch TV, consider Netflix or keep some DVDs around.

4. Move…or don’t

If you’re new to the single-income life, you may be ready for a downsize. We usually don’t need as much house as we think we do; however, you’ll want to calculate the cost first.  Moving isn’t cheap, so it needs to be financially worth it to really make the leap. That being said, if you’re living above your means, consider moving into a more affordable house. It doesn’t have to be permanent.

5. Learn to barter

What are you good at? Landscaping? Cleaning? Home repairs? That’s as good as cash. Reach out to your friends and neighbors, and figure out where you can trade your services. Bartering is the ultimate win-win scenario. This works especially well for babysitting, whether you need a babysitter for a date night or for running errands–find someone to swap with. You both get free childcare, and you both get more done.

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6. Use your resources

There are resources in your city, you just have to find them. It could be a local food bank that is looking for volunteers, and, in exchange, you take some food home. Or you could be in a place where you just need to go to the food bank and get some food. There’s no shame in that; that’s what they’re for. From food banks to food co-ops to clipping coupons, know your resources and use them. The more resourceful you become, the more you will be able to live well on one income.

7. Dump your debt

If you’re new to the single-income lifestyle, you may be wondering how you can get debt-free on less money than you were making before. Dumping your debt doesn’t have to cost more money. That’s right, there are ways to make an impact without spending more. For starters, you can call and negotiate with your credit card companies to lower your interest rates and possibly even your balance.

If you’re serious about paying off your debt, and you don’t plan on going further into debt, consider a balance transfer to lower your interest rate. You must be serious about not incurring anymore debt or this just provides a way for you to go into more debt. But if you really are done with being in debt, a balance transfer can help. For example, if you can pay off your debt in 15 months, the Chase Slate offers 0% interest rate for balance transfers for the first 15 months, with no transfer fee. But you need to be sure you can pay it off in 15 months or the interest rate will go back up to the standard rate.

8. Prepare for emergencies

Emergency funds are a better option than a credit card when disaster strikes. Even if you can only save $50 each month, start putting something away in a savings or money-market account for unexpected expenses. Ideally you’ll want three to six months of living expenses, but $1,000 is a good starting place. Of course, $500 is better than nothing. The idea is to have some funds to dip into in the event of an emergency so that you don’t get into a worse financial spot by taking out a loan or using a card.

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9. Sell a car

Do you have more than one car? Do you need more than one car? Maybe you do, but maybe you haven’t really thought about it. You may have needed two vehicles when both of you worked, but it could make sense to sell one now, especially if you have a car payment. Dave Ramsey always jokes that his show should be called the “Sell the Car Show”, because of how often that’s the most appropriate solution.

10. Save for big purchases

If you have to finance it, you can’t afford it. Instead of taking out a loan for a car or other big purchase, why not make interest-free payments into a savings account right now? Think of it like a layaway plan; you’re saving until you have the full amount. Then you can make the debt-free purchase. If this doesn’t seem possible for some things, you may be living above your means. The bottom line is that credit card and loan interest will destroy your finances. Anything you can do to avoid interest will set you up for success.

Featured photo credit: Crowd of People Crossing an Old Prague Road/Viktor Hanacek via picjumbo.com

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Kalen Bruce

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Last Updated on June 6, 2019

The Average Retirement Savings and How to Save Wisely

The Average Retirement Savings and How to Save Wisely

Are you on track for retirement?

If not, don’t worry, I’m not sure either. I save each month and hope for the best.

Fortunately, I’m at an age where most people don’t save so I’m ahead of the curve.

But, what if you aren’t in your 20s? What if you’re near retirement and are looking to gauge where you stand?

If so, keep reading. Here’s how to prepare for retirement and save wisely during the process.

What Does the Average American Have Saved for Retirement?

Saving for retirement is tricky.

Tell someone straight out of college to save $10k a year for retirement and it’ll be next to impossible.

Make the same request to someone decades older and they’d be more likely to be able to save this amount. But, a 20-year old college student can be “financially ahead” of someone saving more than them. Why?

Age matters in your financial journey. The younger you are, the more time you have to save and put compound interest to work. As you get older and have more saving power, you’d have less time to put compound interest to work.

Here are the average savings Americans hold by age bracket:

20’s – $16,000

During this stage, most people are paying loans and moving up the corporate ladder. Your best bet during this stage is to focus on eliminating debt and increasing your income. Don’t focus only on getting a high-paying job neither.

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Instead, focus on learning via Podcasts, reading books, and taking specialized courses. Doing this will make you more valuable and give you more career options.

30’s – $45,000

At this stage, you’ve hopefully escaped your entry-level salary and work at a career you enjoy. Your earning power has increased but you now have more obligations. For example, marriage, kids, and a mortgage.

Set a plan to pay off all your debt and focus on eliminating unnecessary expenses. Leverage financial tools like Personal Capital to ensure you’re on track for retirement.

40’s – $63,000

This is the stage where you’re at the prime of your career. Top financial institutions recommend you have at least 2 to 4 times your salary saved up. If you’re falling behind, start maxing out your 401K and Roth IRA accounts.

50’s – $115,000

During your fifties, you’re close to retirement but still, have time to save. You may be helping your kids pay college tuition and other expenses. Since you’re at the peak of your earning power, max out all your retirement accounts.

60’s – $172,000

By this point, you should have about eight times your salary saved up. If not, you’ll depend primarily on social security benefits averaging $1400 per month. Max out all your retirement options as much as possible before retiring.

Ways to Save Money on a Tight Budget

The sad reality is that most Americans aren’t saving enough for retirement.

Even high-earning power isn’t enough to secure one’s financial future. You need to have the discipline to save for retirement while time is in your favor. Don’t wait for you to have a high salary to save, start with having a small budget.

First, get a clear picture of where you stand. Write down a list of “needs” and “wants.” For example, Netflix and Amazon Prime are “wants” and a “cell-phone” is a need.

Use tools like Personal Capital to analyze your spending patterns. Personal Capital allows you to add all your financial data in one place–making it a powerful option to gauge where you stand.

Once you know all your expenses, organize them from highest to lowest expense. When you can’t cut more expenses, call your service providers to negotiate a lower price. If you’re not good at negotiating, use services like Trimm to lower your monthly expenses.

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How to Save Money Each Month

By this point, you know the average amount of money you should have saved for retirement based on your age.

But, breaking this down into monthly goals can be challenging. Here are some rule of thumbs to follow:

Aim to contribute 10%–15% of your salary each paycheck. Review your progress each week.

Why so often? The reality is that life gets in our way and you will have many financial setbacks. Your goal isn’t to be perfect but to get back on track instead.

Reviewing your finances weekly lets you know where you stand with your retirement. This doesn’t have to be a long process either. All it takes is login in Personal Capital to view your net worth and check how much you have saved for retirement.

Turn saving into a game and aim to save more each month. It will get challenging but you’ll get creative and find more ways to save.

Top Money Saving Challenge Tips

To prepare for your financial future and not be another statistic you need to be different.

How?

By adopting new habits that’ll help you become a saving machine. Here are some ways you can save more:

Automatically Contribute Towards Retirement

If you’re working for a company, you can automatically contribute towards your 401k. If you’re not currently contributing more than 10%, make this your goal. Contribute 1% more today and automatically increase this amount a year from now.

Odds are that you’re not going to be negatively affected by contributing 1% more. Many times we spend our money on things we don’t need. Contributing more towards retirement is a great way to secure your financial future.

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Use the Right Tools to Know Where You Stand

Once you’re contributing more towards your retirement accounts, gauge your progress. Make use of finance tracking apps to help you view the big picture of your retirement.

When I’d first signed up for the app Personal Capital, I didn’t know I had a negative net worth. Despite saving thousands of dollars, my debt brought my net worth to the negative. Knowing this motivated me to save more and spend less.

Now, I have a positive net worth. But, it was because I was able to view the big picture using the app. Find out what your net worth is using a finance tracking app and you may surprise yourself.

Bring in Experts to View Your Blind Spots

If you have too little or too much money saved, you should consider hiring financial experts.

Why?

You may need someone to hold you accountable to help you reach your financial goals. Or, you may need help managing your money as effective as possible.

Regardless of the reason, getting help may help improve your financial situation.

Before you hire an expert, find out which areas you need help the most. For example, if you’re constantly overspending, find a debt counselor. If you’re struggling with choosing the best investment options, hire a financial advisor.

Speed up Your Retirement Contribution

After learning how to manage your money well, the next best thing is to earn a higher income.

You’re capped at how much you can save but not much you can earn. Even if your employer isn’t giving you a promotion, you can still take charge of your financial future. How?

By starting a side-business.

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This will be something you’d work on after you’ve finished your day job. Once you start earning income from your side-business, you’ll be financially better off.

The best part is the more work you put into your side-business,[1] the more potential it has to earn more money.

So start a side-business in an area you’re familiar with. For example, if you enjoy writing, do freelance writing for small e-commerce businesses.

Once you’re earning a higher income, you can contribute more towards your retirement. Don’t wait for the right opportunity to secure your financial future, create one.

Reach Financial Freedom with Confidence

What if you were able to retire tomorrow with no problem, all because you’d have enough money saved up and little to no debt left to pay off? How would you feel?

My guess is that you’d feel happy and relieved.

Most Americans are falling behind their retirement goals for many reasons. They’re not prepared, they carry bad money-habits and are thinking short-term.

For you to retire successfully, you need to work backward and adopt better habits. Contribute more towards your 401K and focus on growing your income.

If you do, you’ll save money and pay debt faster.

Don’t beat yourself up if you’re behind your retirement goals. Take the first step today towards a brighter financial future. Isn’t retirement worth the hard work and sacrifice to be at peace?

Featured photo credit: Huy Phan via unsplash.com

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