How to Live On One Income

Many people who are able to achieve high levels of financial success are known as DINKs. This acronym stands for dual income, no kids. Those who have two middle-class incomes in a household should do pretty well when it comes to their finances. However, this is frequently not the case. Many of these DINKs spend nearly every dollar that comes their way. In reality, families that have two incomes should aim to live off one income and save the other.

Why Save 50% to Live On One Income?

There are some good reasons to only use up half the money your household earns. The first is tied to flexibility. Job losses happen, and so do disabling illnesses and injuries. Those who are able to make it on one salary will be able to deal with these unfortunate circumstances easier.

Another good reason to put 50% of household earnings aside is to have a nest egg so that one spouse can have the option to take off some time if the family grows through the birth of new children. It’s not necessary for a parent to take off a few years, but it can become an option. A final reason why you might want to stash away 50% of your combined salaries would be to take advantage of the possibility of early retirement.

Budget

One of the most important steps toward saving 50% of combined household income is formulating a budget. A budget is a tool that tells your money where it should go. Without a budget, it’s easy to let money slide through your fingers so that you wonder where it all went at the end of the month. By putting half of the salary you make into various savings vehicles, you’ll be able to achieve the goal of living on one of two incomes or half of one.

Cut Back

To stash one of every two dollars you make in a savings or retirement account, you’ll likely have to cut some expenses. Some of the more common areas that are possible to cut back on are cable, eating out and groceries. It’s estimated that Americans waste about half of the food that’s produced in the country. There is definitely room for most people to cut waste. Every dollar that you cut from your budget is an additional dollar you won’t need to achieve financial independence.

Make More to Live On One Income

Most people do not have a limited ability to bring in cash. There are many options for earning more. After cutting back on your budget, you might have to earn more to save one of two incomes. Starting a side hustle or getting a second job can be options that will allow you to bring in more cash. The additional cash should always go toward saving more as long as your bills are covered.

By focusing on emergency and retirement savings, you can really ramp up the amount of cash in your accounts. More cash means more flexibility and freedom. If you stash enough to live off one of every two dollars your household earns, you’ll be on your way to freedom in no time.

This is not legal or financial advice. Please consult a legal or financial advisor for your specific situation.