This is a guest post by Tegan Phelps of The Blissful Budget.
Saving money while living on one income might feel daunting and overwhelming, but it doesn’t have to be.
Learning how to save money (especially while living on a single income) is a healthy financial habit that everyone should learn.
Whether you just got laid off from a job or have deliberately decided that one income is the best decision for your family, saving money is still a possibility.
Having some extra money set aside can ultimately:
• Help you avoid debt
• Help you to save for retirement
• Reduce financial stress and anxiety
• Move you towards financial freedom and independence
The steps outlined in this post will help you save more money and reach your financial goals, all while living on a single income.
Let’s dive in!
How to Save Money Living on One Income
Pay off all debt
Paying off all debt is one of the best things you can do to start saving more money each month.
Debt includes student loans, credit card debt, car loans, personal loans, or any other money that you owe to someone else.
The more money you owe, the more difficult it will be to save.
Paying off your debt first will help you to save more money in the long term because you will no longer be required to pay back borrowed money with interest attached to it.
The fastest way to pay off your debt is to solely spend money on what you absolutely need and use what you have left over to pay down your debt. Making more than the minimum payment each month is key to paying it off quicker.
Create a budget and track your spending
If you are trying to save money, creating a budget and tracking your spending are extremely important steps.
You will first need to figure out how much you are spending and continue to monitor it every single month. There are smartphone apps out there that can track your spending for you, or you can do it yourself manually by monitoring your bank account.
Once you know how much money is flowing in and out of your account, you should create a personal budget. Then you will be able to decide how much money you are able to put into savings.
Live below your means
Spending less than you earn, or living below your means, is one of the best ways to reach your financial goals and save more money.
Once you create a budget, you will be able to see how much income you have coming in each month.
Your monthly income will then become your spending limit. You should avoid spending more than your monthly limit, and to try to spend as much under the limit as possible.
The goal with living below your means is to live like you are broke and spend way less than you actually make each month.
Make some financial sacrifices
When trying to save money, consider what your daily routine looks like.
Maybe you are someone who enjoys a $6 latte every morning. Perhaps you have a habit of buying trendy, on-sale items every time you are at the store. Or maybe you eat out 3 nights per week because you don’t want to cook.
These costs seem small upfront, but they can really add up throughout the month and quickly become large costs.
Some other unnecessary costs include:
Subscription services and memberships – Do you have a gym membership that you use twice a year? What about a monthly subscription box or magazine service? These costs can really add up!
Cable – With so many alternatives to cable available, there is no reason to spend a premium for T.V. shows. You could even cut out T.V. out all together for a while to find cheaper forms of entertainment.
Name brand items – Some brands massively mark up their prices on their items because they know people will pay for them anyway. But buying brand name items is not necessary and can save you a ton of money by buying generic.
It also helps to have a grateful heart for the things you are able to afford today. Having an abundance mindset will help with not feeling the need to buy unnecessary things.
Automate your savings
If you automate your savings, you won’t even notice that you are saving the extra money.
Out of sight, out of mind.
You can do this by setting up a percentage or a set amount of your paycheck to automatically get deposited into your retirement savings or cash savings account. Then you won’t be able to spend that money because it will already be saved.
Shop second hand
You wouldn’t believe the number of items that are given away to thrift stores each day. Sometimes even brand-new items!
If you have a budget for clothes each month or year, it’s important to make every cent count. Buying second-hand clothes, shoes, vehicles, and appliances at garage sales, estate sales, and thrift stores will help you to save a lot of money.
You can also find amazing second-hand items online at Poshmark, Thredup, and eBay.
Downsize if possible
Your home and vehicle are both large monthly costs. Downsizing one or both of them can be really beneficial to help you save money while living on a single income.
Moving homes is way easier said than done, so if you can’t downsize your home right now, consider renting out an extra room on Airbnb.
Also, if you have a vehicle that requires a ton of gas or if you have a car payment each month, consider downgrading to a smaller and less expensive vehicle. If you have multiple vehicles, maybe try keeping one and selling the others.
Don’t give in to lifestyle inflation
What do most people do when they are given a raise or bonus from work? Most of the time they will find new ways to spend the extra money and will then perceive their new “wants” as needs. This is called “lifestyle inflation”.
Lifestyle inflation can be completely avoided by acting like you never received any extra money at all. Continue spending the same amount that you always have in the past and put the extra money into savings or invest it towards your future.
It may be tempting to spend more money as you make more money but try to live like you are making way less money than you actually do.
Find additional streams of income
There is an abundance of different side hustles to choose from. Chances are you can find one that is best for you!
Here are some examples of different side hustles you could look into to increase your monthly income:
• Start a blog
• Write and publish eBooks on Kindle
• Sign up for a dog-walking service and walk dogs
• Sign up for Amazon Flex and deliver packages
• Make and sell hand-crafted items or printables on Etsy
• Flip items on eBay
Whichever option you choose, the extra income will help you put more money towards your savings and retirement.
Whether you are living on a low income or a single income, saving money each month is still a possibility!
It will take some time and patience to get on track, but you will feel more secure knowing that there is money in the bank for emergencies and for your future.
Once you find a method that works for you, stick with it!
You’ve got this!
Tegan Phelps is the founder and author of The Blissful Budget. She created her website to help people save more money, make more money, and reach their financial goals. You can find more personal finance tips on her blog, and on social media.