How To Live On One Income As A Couple

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One worthy financial goal is to live on one income as a couple.

Living on one income as a couple enables you to live life very differently.

In the early days of our marriage, we lived together on one income, by force.

I was working and Lindie wasn’t so my income is all we had to lean on.

Despite this, we found a way to live well on a small income and enjoy ourselves.

However, things swiftly changed once Lindie got a job and we were both working.

Having more money coming in gave us more room to afford a lifestyle we couldn’t before.

So we had to do some work to go back to living on one income as a couple.

How To Live On One Income As A Couple

Moving in with your partner is a significant step, both in your relationship and in your finances.

If you both work, this means two sources of income.

But this also means more outgoings and more expenses to cover both of you.

Two people moving in together bring different desires, experiences and wants.

All this impacts and influences your financial intimacy.

It’s so easy to find yourself relying on both income sources to maintain the life you’ve built.

This is essentially called lifestyle creep, or in the case of a couples, the two-income trap.

It’s a trap because to financially support the life you’ve built, both of you need to work.

Why Live On One Income As A Couple

Ultimately, it’s about financial freedom and financial freedom is really about time freedom.

Being free to do what you want and love with your time.

You’ll have the freedom to switch jobs and do work that aligns with you more even if it’s less pay.

Or the freedom to work less to be more present with your family.

It also brings financial peace in your relationship as you won’t be living hand to mouth.

These are just a handful of the many reasons why living on one income as a couple is worthwhile.

Living on one income together has empowered us to make different choices.

We’re putting the other half of our money towards our FIOR journey.

Here are nine things we did to enable us to live on one income as a couple.

1. Have A Budget

This is so obvious I nearly didn’t mention it.

However, some couples don’t talk about money together never mind having a budget.

Having a budget as a couple is essentially having a plan for what you’re doing with your money.

A budget gives you the foundation to align your financial decisions towards living on one income.

There are many ways in which you can set up your budget as a couple, I’ll share one.

Combine all your money and see all your income as our income instead of yours and mine.

In my opinion, this is the best way to start living on one income together.

How To Budget As A Couple

Start by putting all your household income sources together.

Then calculate how your living expenses match up against that income amount.

Discuss everything else together. Savings, investments, debts, takeaways and personal shopping.

This doesn’t mean everything is in joint names, it simply means you’re allocating your income together.

You’ll both have an equal say in what happens with every penny.

You’ll still allocate personal monies to each other to spend on your own needs.

2. Have An Emergency Fund (& Sinking Funds)

Don’t sleep on this one, an emergency fund has changed our lives!

An emergency fund is like having your own interest-free credit card.

When something happens that impacts you financially you use your emergency fund.

Emergency funds serve as the cushion and foundation to cover you through life.

This way, you won’t need more money to cover these unexpected costs or worse use debt.

It’s good to have three to six months worth of your monthly living expenses saved as your emergency fund.

Imagine how you’d feel if you had enough money to pay for months of your bills saved.

Sinking Funds

The sisters to emergency funds are sinking funds.

Sinking funds are various pots of money you have for a specific purpose in the future.

You can have sinking funds for annual bills, special occasions, date nights and car upkeep costs.

You save in advance for all these various elements in your life.

This way you’re preparing in advance for the cost and not relying on your pay in that month.

This enables you to start being smarter with your money management.

3. Pay Down Debts

Paying down debts helps anyone in any position but it’s more critical in this situation.

As you start to move towards living on one income together you’d want every penny to count.

Debt robs you of that, particularly high-interest consumer debts.

One of my must-read books, The Simple Path to Wealth,  talks about debt being the destroyer of financial independence.

In essence the money you could have for yourself or your future is going to your debts.

The painful part for us was our debts were largely due to not having an emergency fund, and consumerism.

An emergency fund would’ve saved us the need to borrow to cover these unexpected costs.

And controlling our personal shopping would’ve saved us from being in debt, more on this later.

How To Pay Down Debts

List all the debts you each have. 

Put the name of the lender, the amount you owe, the interest rate charged, and the minimum monthly payments you have to make.

Calculate the total of the minimum monthly payments and match that against your monthly income.

Assess how much more you can pay towards your debts.

You can prioritise to repay the debt with the lowest amount owed first then moving on to the next smallest one after that.

This is known as the debt snowball repayment method.

Or, you can prioritise to repay the debt with the highest interest rate first then moving on the next high-interest debt.

This is known as the debt avalanche repayment method.

Both have their pros and cons but both reach the same goal – being debt-free.

4. Manage Your Outgoings

Tied closely to having a budget is managing your expenses.

These are lessons learnt from the budgeting mistakes we’ve made on our journey.

Firstly, keep a close eye on the amounts you’re paying.

Prices are not fixed for life, they can change over time. Some quicker than others, but they’ll definitely change.

This includes looking for other options and seeing if you can get the same value at a lower price.

Secondly, manage the purpose of the outgoing.

You may be paying for something that used to serve you but no longer does.

If we haven’t used a service after two to three months we have a discussion about cancelling it. 

There’s no point paying for an unused service, it’s the definition of waste-of-money.

Another perspective is paying for a service that is less important than your goals.

Sometimes your dreams and goals compel you to forgo a non-essential expense.

Having said that, we don’t subscribe to the notion that you must starve yourself to reach your dreams.

It’s really about balance.

We have designed a budgeting spreadsheet for you. It is the Ultimate Money Plan spreadsheet template with everything you need to take charge of your finances and crush your money goals.

5. Delayed Gratification

Earlier I spoke of controlling our shopping sprees, well this is how.

Gratification is the pleasure or satisfaction gained from a fulfilled desire.

It’s the feeling we get when we buy new clothes, new tech, book a holiday or even invest our money.

Delayed gratification means, well, to delay that gratification for a future date.

It’s not saying no, it’s saying not now.

There’ll be moments where this desire to spend will damage your ability to live on one income as a couple.

Instant gratification is how many people look rich but aren’t rich.

It’s how credit cards debts can go from manageable to completely out of control when interest is applied.

How To Practice Delayed Gratification

One common rule for delayed gratification is to take some time to think about your purchase before making it.

Some say one day others say 3 days, really it’s all serving the same purpose.

Take the time to ask yourself if you really want that item you’re considering buying.

If the answer is no, that’s the end of it. Soemtimes you won’t say no, you’ll simply forget about it.

If it’s a yes, then the question is, what’s the financial impact of that decision?

Do you have enough money to purchase it without affecting you other financial commitments?

Or do you need to delay the purchase until you have enough money saved for it?

A key point is to calculate the total cost of ownership, not just the item price.

For example, an iPad will also need a new case, Bluetooth earpods, maybe a pen and a keyboard. All sold separately.

6. Set Money Goals

I’m a big believer in having money goals.

Goals give you direction and focus financially.

Many couples only talk about money when concerned with paying bills but nothing beyond that.

Money goals are future minded, it’s how you beginning to think of your financial future.

More importantly, you’ll start to set a plan on how you’ll get there.

How To Set Money Goals As A Couple

I’ve gone into detail on how to set money goals as a couple but here are some tips.

Let’s say your goals is to live on one income as a couple. Very imaginative I know!

First, decide which income source you want to live on and match that against your outgoings.

Secondly, decide your strategy. The most common one is to reduce outgoings to match your income.

My preferred strategy is to reduce your outgoings AND increase your income. 

Thirdly, set boundaries and systems in place to support that goals.

For instance, set a maximum amount of how much your living expenses should be.

You may decide to use joint accounts for the shared expenses so you both know what’s going on.

You may set a rule to always look for cheaper alternatives every renewal cycle of your bills.

The aim is to set rules in place that will enable you to reach your goals.

7. Downsize

There’s a film called Downsizing where scientists aims to solve the problem of overpopulation by downsizing people to a height of 12cm.

This apparently has major benefits, with finances being one of the top ones on the list. 

Sorry to disappoint but that’s not the downsizing I’m referring to, despite having similar connotations behind it.

Downsizing is effectively to reduce the size of something.

In this context, I’m advocating you downsize certain aspects of your life to make financial gains.

For example, we downsized our food shop to save money.

We used to dump everything in the trolley but now we buy what we know we’ll eat according to the meal plans.

We also downsized from having two cars to having one car which saved us a ton of money.

For some this may mean moving into a smaller house or adopting some minimalism.

Take some time to think about areas in your life that you can downsize that will enhance your financial position.

Again, we’re not advocates of depriving yourself today and being unhappy for future gains. 

But you can still be a happy with a cheaper car or house.

8. This Is A Marathon Not A Sprint

It can be easy for couples to give up wanting to live on one income after a few months of trying.

Don’t try to go from living on ninety per cent of your combined income to fifty per cent overnight.

Take one step at a time to get there.

If you sprint to get there you’ll find it challenging to sustain and maintain.

Set a plan in motion to live on one income as a couple, but take reasonable and manageable strides.

When we started our journey we started off with taking packed lunches to work instead of buying food.

Then we started allocating each of us a personal spending allowance for our personal needs.

And we put money aside for miscellaneous expenses that come up.

All these steps took time and didn’t happen at once. 

This journey will require patience and dedication from each of you.

9. Do It Together

This is the glue to all the above.

There’s little chance of you living on one income together if you’re not in it together.

The reasons why people in a relationship are called partners is because they are in something together.

Be partner financially and do money together.

This includes holding each other accountable for actions to be made.

It includes encouraging each other to stay committed to your financial goals.

Be each others hype man when you do the right thing.

Celebrate your wins and learn from your losses as a team.

To live on one income as a couple means you’re operating as one unit.

Take Action

It’s a worthy goal to live on one income as a couple.

Talk to your partner about this and get the conversation going.

Share this to others if you found value in it and feel others should too.

Check out our Ultimate Money Plan to get in control of your money and smash your financial goals

Let us know how you’re getting along by getting in touch with us, we’d love to hear from you

Knowledge is powerless without action

So take action, and take care

Thando