Living On One Income

Conventional wisdom says save 10% of your income and you are all set. We all know this is bogus. The only thing that will be set is your working career lasting 40 plus years. The two obvious ways to increase the amount of money you are saving is to increase your income and decrease your spending. There is an interesting life event many people go through where both of these scenarios can happen at once, and it is when a couple moves in together.

As I am in my late twenties and everyone around me is getting married or moving in with their spouse, so I have seen the common scenario. Spouse A pays $900 per month for rent and spouse B pays $900 per month, so when they move in together they get a nicer place in a better location for $1,800 per month. For most people housing is the budget category they spend the most on per month, and they miss an opportune time to decrease it. We all know what this is, it is lifestyle inflation. Couples see their income double when they move in together and start spending more right away.

I have another idea about what should happen when a couple moves in together. Try living on one income. You heard me. Pretend as if you only had one income and try to spend according to that one income. I know this can be a hard task, but hear me out as the benefits are tremendous.

Crush financial goals. In essence, living on one income is saving half of your income (if both spouses earn the same). The extra cash flow left over at the end of the month can pay down student loans, save up for a house down payment, speed up investment goals, etc. Saving half of your income means you can possibly retire in 17 years if you invest it. That is less than half the time of a conventional working career.

Remove money stress. If you’re living on one income and one person gets laid off, what happens? Your savings will go down but you will still be able to meet all of your financial obligations. You might not be paying off debt or investing in your brokerage account with the same vigor, but rent will be paid every month. You will be able to pay for groceries. No debt will be wracked up while the second spouse finds a new job. This also makes it much easier when making the decision if you want to start a family and have one spouse stay at home. Is one spouse really burnt out and needs to take a sabbatical? That’s okay since six months off won’t break the bank. Does one spouse have a passion that does not yield much of an income? It actually is now possible for one spouse to go down that path.

Take risk. If you are living on one income, you can go a period of time without the second income. Does one spouse have a great idea and the entrepreneurial itch? Instead of having to raise money from others to start your venture, maybe you can bootstrap it yourself since your spouse is able to pay all the bills. Starting that business no longer has extreme consequences if it does not work out. We know entrepreneurship is one great way to possibly earn an upper class income and it is much easier to take that risk to potentially earn that great reward if you can live on the other spouses income.

I know this isn’t possible for everyone, but I believe it is something to shoot for at a minimum. If you want to take it even one step further, try living off the income of the spouse who earns less. This will boost your savings rate above 50% and help you crush your financial goals in short order. Financial independence will now be a very achievable goal.

Could you and your spouse live on one income? If so, do you?

44 thoughts on “Living On One Income

  1. Steve @ Think Save Retire

    Incredibly wise advice! When my wife and I got married, we decided to put her entire salary into savings along with about 40 to 50% of mine. So in essence, we are living off of about 0.25% of both of our salaries combined, making our nearly 75% savings rate help our ability to call it quits super early.

    And we aren’t exactly roughing it, either. Your point about taking risks is a good one. I nearly quit my job last week because of a travel requirement (more on that in a later blog post), and we were able to do that because our savings rate is so high and our spending is so darn low.

    Excellent topic!
    Steve @ Think Save Retire recently posted…The work experience: In the beginningMy Profile

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    1. Fervent Finance Post author

      I love flexibility and hate stress. Saving one income helps in both categories for sure. Interested to hear about your almost early-er retirement 😉

      Reply
  2. Mr. SSC

    Yes we can, and yes, we do. 🙂 This was the reason Mrs. SSC was able to take a 6 figure paycut and we’re still able to save $3k or more per month. And that was during her no paycheck period. Now that she’s getting a paycheck, I think it might be doubled.

    That’s a great way to start practicing “not” inflating your lifestyle though, living on one income. Like you pointed out the benefits are plenty, because it opens up so many options that wouldn’t be available if your lifestyle depends on both paychecks, every month…
    Mr. SSC recently posted…October 2016: Our Money Went Where?My Profile

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    1. Fervent Finance Post author

      That’s crazy to think about taking a six figure paycut. I’ve thought about pulling the cord from working for the man early and trying the whole entrepreneurship thing. It would definitely hurt for a year or two at a minimum until I could build my income up. But that’s why I live a frugal lifestyle, so that I can make choices like that. Glad everything is going so smoothly with the change!

      Reply
  3. Mrs. Picky Pincher

    Mr. Picky Pincher and I could totally live on one income if we needed to. In fact, we save most of my income for savings and debt repayment. Gotta love that 50% savings rate, baby! We accomplished that mostly by decreasing our expenses and keeping our lifestyle small and simple. We’ve had a few pay increases as well, and those certainly didn’t hurt our savings rate either.

    If we were to go down to one income, of course, we wouldn’t be able to save nearly as much money, so that would be a challenge.
    Mrs. Picky Pincher recently posted…6 Personal Finance Lessons from Granny MaryMy Profile

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    1. Fervent Finance Post author

      It’s great when you allocate your pay raises directly to savings. No lifestyle creep there!

      Reply
  4. earlyretirementnow

    That’s great advice! Too many couples get into financial trouble after one spouse loses their job. It’s because everybody gets accustomed to spending 90% of their income. I have also applied your advice in a different setting: Moving to a new job with a much higher salary or getting a promotion and/or pay raise? Simply don’t adjust the lifestyle and save the rest. That works wonders with the savings rate.
    Cheers!
    earlyretirementnow recently posted…Why would anyone have a mortgage and a bond portfolio?My Profile

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    1. Fervent Finance Post author

      All my raises and bonuses have gone to my investments or debt pay down over the past few years. It’s a great way to rid yourself of lifestyle inflation!

      Reply
  5. david barth

    Great advice. I have lived through this exact situation – and for the most part, still am. We were able to live off of one salary and lifestyle changed very little. It not only can happen, it’s a great mindset for a culture obsessed in living up to and beyond their means. Difficult to go backwards in lifestyle spending….much easier to go up.

    Reply
    1. Fervent Finance Post author

      Very true David about spending hindsight. I could definitely ratchet up my spending quite easily, but if you get used to that it could be hard to become frugal again.

      Reply
  6. Leigh

    Yes, yes, and yes to all of your points. My husband was paying $1,900/month for rent before he moved in. I was also paying $1,900/month in carrying costs on my condo. When he moved in, we didn’t move out of my condo – we stayed in it. That halved our housing costs and saved him about $50,000 over the course of the last two years. Guess where most of that went? Vanguard. And going forward, this will continue to help us crush financial goals, remove money stress, and take lower income risks.

    We never saw our income as doubling when he moved in because we kept our finances so separate.

    2016 has been really spendy for us. For 2017, our plan is to keep our joint spending under my husband’s net income after maxing out his 401(k), which gives us about $80,000 to work with, and then to save the rest. That should be more than enough for two people…

    Separately, we’ve been saving about 60-80% of our total incomes the last few years, which is sort of like living on one income except not really since our finances aren’t combined.
    Leigh recently posted…Hindsight on Years of Aggressive Mortgage Pre-paymentMy Profile

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    1. Fervent Finance Post author

      Great job cutting the collective living expenses in half! We don’t have combined finances but we could live off the lower earning spouse’s income if we had to. It’d be tight though.

      Reply
    1. Fervent Finance Post author

      Let me guess, the person earning more is the one that would want to stay home? Much easier decision to make when the spouse wanting to stay home makes less. Best of luck in your eventual decision!

      Reply
  7. Matt @ The Resume Gap

    Yep, this is probably my favorite straightforward approach to get people into aggressive saving mode. Even if you live on the larger of the two paychecks, you’re still banking someone’s entire salary, which adds up quickly (especially if you take advantage of deferring taxes on $18k of it in a 401(k)). Even better if you can live on the smaller of the two, which automatically puts you on track to FI in ~15 years or less.
    Matt @ The Resume Gap recently posted…Financially Independent …and on Medicaid?My Profile

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    1. Fervent Finance Post author

      We could probably live on the smaller of the two, but it would be a stretch! But definitely brings us a level of great flexibility if we decide to exercise it.

      Reply
  8. Mr. Grumby

    Your advice is excellent. Mrs. Grumby and I are older than you but we’ve been able to accumulate FI money in about 9 years, after overcoming some large student loan and other debts. We started by saving a rainy day fund that would help support us if we were unemployed for a few months, and rolled from there.
    I try to preach this gospel to my neices and nephews, but not sure they are listening.
    Keep up the good work!

    Reply
    1. Fervent Finance Post author

      I hope your nieces and nephews see the light! I wish I had relatives spreading the saving and investing gospel when I was young.

      Reply
  9. Mr. PIE

    Great post.

    In our spendy years, we didn’t adhere to this in its fullest form. Yet now, we are living off most of Mrs. PIE’s salary and a smidgeon of mine. We could dial a few things back if push came to shove. E.g. Mrs PIE had a scare at work and we mapped out some contingency plans.

    And don’t count bonuses into lifestyle. Just bank them, invest them as they are often not guaranteed and hence people should not get used to them as normal.
    Mr. PIE recently posted…Winter Activities – Minimized Cost, Maximized FunMy Profile

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    1. Fervent Finance Post author

      It’s amazing how much flexibility it provides you and peace of mind. 100% of my bonuses and raises for the last few years have gone directly to debt pay down or investments. I pretend they never happen 🙂

      Reply
    1. Fervent Finance Post author

      Awesome. I probably couldn’t of done it years ago, but now with understanding where my money is going an income increases it is definitely doable.

      Reply
  10. Jeff @ The Lifestyle Accountant

    Lifestyle Inflation gets the best of most people, unfortunately. Living on one income is a very smart move to make, especially when you figure that out early on in life. The ‘take risks’ bullet point really makes saving money worthwhile. You can afford to travel slowly, start a passion project or simply experiment with your lifestyle in ways you can’t when you’re tied down by debt or possessions.
    Jeff @ The Lifestyle Accountant recently posted…The Ultimate Guide To Finding Remote Accounting Jobs (Plus tips to help you get the interview)My Profile

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    1. Fervent Finance Post author

      The take risks bucket is one that is available to those who can live on one income, but probably used the least! Maybe I’ll suck it up and take a risk one day 🙂

      Reply
  11. Team CF

    We both earn about the same, and our savings rate hoovers around the 50-55% mark. So yes, we definitely can live on one income if need be. This was also our goal from the start.
    That being said, if we would live on one income, daycare costs would also disappear (as one of us would be at home obviously). In that case we would still end up with a savings rate on one income of about 30% (currently daycare costs account to about 30% of our total expenses……who said kids are not expensive 😉 ). Not too shabby.
    Team CF recently posted…Real Estate Investments – History, Yields, Risks and StrategiesMy Profile

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    1. Fervent Finance Post author

      It’s a good goal to have, cheers to you for thinking of it ahead of time! Not too shabby at all.

      Reply
  12. Full Time Finance

    This is exactly what we did when we got married. We chose the lower salary to boot and didn’t let it inflate with pay increases. Fast forward 8 years and my wife wanted to be a stay at home mom. That choice early on enabled us to make that happen.
    Full Time Finance recently posted…The World of FreeMy Profile

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    1. Fervent Finance Post author

      That’s great! Some people need to make drastic changes to their spending when one spouse stays home since they were used to living on 90% of their combined income. This makes the transition so much smoother and no spending has to change (if you don’t want it to).

      Reply
  13. john mansolillo

    Wise advice, but do so in the best, most tax advantaged way. When we got married 2 years ago, we decided to do just that… we lived off just my income. We put my wife’s smaller salery towards her student loans, and her minimum company match. Excess was invested variously out of my paycheck. What we failed to consider was taxes. As a military family, I don’t pay state income tax, but the wife does, for now. By not putting the maximum contribution into her 403b, we exposed the difference to state taxes, and the lost oportunity cost that implies. Now we still live off the one income, but treat the money more fungibly. I’m sure there are other circumstances where this lesson would apply.

    Reply
    1. Fervent Finance Post author

      Good points John. Definitely something to consider is which pot the money is coming from in military families like yours. Take care and thanks for your service.

      Reply
  14. Julie @ Millennial Boss

    I make over 95% of the income so essentially we are living on one salary. That is partly because we moved to a new area and my husband is working part-time for now. He has his dream job though and part-time is probably his dream working arrangement. It works for us! Now if only I can get to part-time… =)
    Congrats on making a smart decision instead of doubling up on your expenses.
    Julie @ Millennial Boss recently posted…The Do’s and Don’ts of Planning Your Budget-Friendly WeddingMy Profile

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    1. Fervent Finance Post author

      I think if couples approach finances (and life) as a team, they’ll definitely kick some ass along the way. Take care Sam.

      Reply
  15. MiltaryFIRE

    I might take this theory even further- live on less than one income. My family is effectively saving (investments & debt paydown) 100% from one income and ~30% from the other. Initially we took “live on one income” to mean spend all of that one income. Our ideals have matured as our path to FI has taken off.

    Reply

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