How To Budget With Only One Consistent Income

As many of you know, I decided to quit my day job. We are now only left with one major consistent source of income: my wife’s job. I am making some decent money online writing and managing websites, but nevertheless we’re going to have to get very frugal and make sure our budget works. Here is how you too can make your budget work when you’re primarily living off of one income.

Budgeting on One Income

If you know you are going to lose a source of income (your spouse loses their job, you lose your job, or your small business is going to take a hit), the time to plan is now. Or perhaps you already live off of one income, but you’ve been running up credit card debt and need to figure out something new.

First, look at your expenses.

The very first thing you need to do is look at where you are spending your money. Are you going out for ice cream every other day? Maybe you have three cars in the driveway and you could get rid of one to save on insurance. Maybe you’re paying way too much for your cell phone service and need to cut back or your Internet can be downgraded from Boost ++ to standard Boost. You get the idea.

Here are some cuts we are either considering making or have made:

• Go down to one car. Because I’ll be working from home, we only need one vehicle. This will save on gas, insurance, and maintenance costs.
• Completely eliminate or greatly reduce gift giving to others. This is a necessary move as we spend a lot of money per year on giving to others. This one is a difficult sacrifice to swallow. We plan on maintaining our tithing to the church however.
• Do without a cell phone for myself and use an iPod touch instead. By signing up for Google voice, I have found a way to make free phone calls from my computer at home and get text messages through my iPod touch. This is saving us approximately $30 per month.
• Cut my wife’s texting plan and have her communicate through iMessage. Many of our friends and family have iPhones, so we can text them for free using iMessage. No worries, she happily is making this sacrifice! Thank you honey!
• Cut our grocery spending down to bare necessities. We were able to trim off $100 per month in grocery spending. Wow!

As you can see, these sacrifices aren’t a walk in the park. They’re real. They’re in our face. They’re the same type of sacrifices you might have to make if you’re going to live on one income.

One idea is to use a cash back debit card from PerkStreet to save some extra money.

Second, look at your income.

After you have brought your income down to the bare minimum necessities, you are ready to focus on raising your income. Maybe you were working two jobs and now you’re only working one - find a way to make your one new job supply as much or more as your old two jobs.

It is better to be really, really good at one job than it is to be just okay at several jobs. If your energy is spread too thin, you won’t make progress. Find your dream job and become the best you can be at it.

That being said, it is always good to have a backup plan. As I get older, I’m starting to realize that the best investment you can make is in yourself - your knowledge and your skills. Don’t be afraid to make the leap from several jobs to one job - learn to trust in your God-given abilities.

I’m convinced that over time my decision to work full time online will be the best decision I’ve ever made for my career. I’m focusing my efforts instead of spreading them thin. Let’s see what happens. I’ll keep you updated.

Prioritizing Your Budget Spending

You know those water fountains that pour liquid from one bucket and then down to another? In the same way, you need to prioritize your expenses. Make a list of all your expenses and prioritize them from top to bottom.

A few priorities you should have at the top:

• Food
• Housing
• Utilities
• Transportation
• Clothing

When you have your prioritized list and how much you should spend in each of the categories, you’re ready to budget effectively.

Maintaining Your Budget

As you make purchases, remember to keep your receipts or make a note about how much you are spending. At the end of the day, gather your receipts and notes to mark down how much you spent in each of your categories.

Another important part of maintaining your budget is doing a monthly budget review. Sit down and review your budget every month before the month begins.

Next month we’re going to be starting our very frugal budget. Stay tuned for updates on how things are going, we’ll keep you posted!

Do you currently live off of one income? How much do you live off of per month, and how do you manage it? Leave a comment below! It would definitely be encouraging.