Learning to live on one income is one of the things that is hardest to figure out when you are a new parent, but it’s the key to being able to be a stay at home.
Before going on maternity leave, my partner and I had a combined income of over $200,000. Our savings were looking healthy, and we were able to do what we felt like when we felt like.
Of course, much of that savings went towards the cost of having a baby!
Now that I am a stay at home mama, I’m always looking for ways to be a bit more frugal, without sacrificing our lifestyle.
I won’t say how much our income currently is, but rest assured, my partner makes a pretty average but very steady income. He works a typical 40-50 hour week and is away from the house from 07.30 in the morning until usually around 5.30 pm.
In the first few months, I hadn’t quite gotten a handle on the single income thing.
I spent way too much money and used my free time like a rich person! I look back on that now and lament the money “wasted” on going out to cafes and buying whatever I wanted.
We live on one income without feeling stressed about money.
We spend less time consuming, and more time creating. I still have my hobbies (ahem, blogging) and we’re now saving up to 30% of our monthly income and we’re continuing to invest in the stock market.
Yes, we keep investing automatically even though the market is starting to decline. This is called dollar-cost averaging and I’ll write about it more on an upcoming post.
Read on to learn how we budget, and my top tips for living on a single income.
So how do we live on one income?
I read a book a while ago called the barefoot investor. I listened to it on Audible – in my car, while driving my sleeping baby around after playgroup. #mumlife
We decided to implement many of the author’s suggestions, with our twist.
After doing a mud map of the different accounts we had, and where our money was coming and going to and from, we decided to streamline our accounts and use a simplified digital version of envelopes.
We now have 3 shared bank accounts.
The first thing we did was to create a total of all our income.
In my opinion, paying yourself first is the most important part of all personal finance. We put 20% of all income into a savings account and use these savings to purchase ETFs, Gold, and Shares.
This is a non-negotiable for us, and it means that our savings is constantly growing.
We then made a spreadsheet of all of our monthly and yearly bills. This includes everything like phones, internet, gas and electricity, car payments, and even our typical petrol consumption.
We took the yearly amount and divided it by 12 months to have a monthly amount needed to pay our bills.
Of the leftover amount, 10% goes into our Splurge account, and the rest goes towards daily expenses.
Splurge is used for things like going out for coffee or buying super cute Scandi overalls for our son.
Daily expenses covers ALL of our food from supermarkets and any other sundries that come along.
We’ve been following this system for about 6 months now and it’s worked a charm. Our savings and share portfolio are looking healthy.
We use ING Orange accounts, which are great for Australians as there is a handy app that has all your accounts at your fingertips, and it’s 100% free of all charges. They even refund all international transaction fees.
How to live on one income without feeling broke
#1 Try a no-spend month
One of the biggest things I had to learn when we started this budget, was to stop being frivolous with spending.
It’s a quick way to learn to live on one income.
I did a no-spend month, which was a big shock to the system, but it cut my café habit from $10 a day to zero.
As a result, we were no longer dipping into our savings each month, and we were able to start increasing our savings.
No spend challenges are on-trend right now, as we all start tightening our belts as a recession looms. Being able to be happy and fulfilled on a small income is a skill that is worth learning.
For my no spend month, my hard rules were no cafes, no take away, no eating out, no clothes shopping.
I learned quickly how to make a great fakeaway coffee at home, and started trying new recipes to keep from getting bored with home food.
#2 Shop in bulk
Food is probably one of the most expensive things in any household. As a single income household, we need to be on top of our bills.
Our electricity bill is a killer in the winter, but our food bill is always higher.
The simplest way I have found to cut down that food bill is to shop for bulk foods.
I buy anything and everything in bulk, including beans, chickpeas, tahini, olive oil, olives, even passata!
That extra money that you pay for convenience will add up. And while it doesn’t feel like it at the time, the little bit of extra effort will make a big difference at the end of the month.
#3 Cook from scratch
Cooking has never been my favorite pastime, but I’m slowly learning how to make all of my favorite dips and sauces from scratch.
This saves money, plastic, and your health as homemade foods won’t have all the preservatives, colors and fillers that are present in commercially produced food.
When you live on one income, you need to learn how to make food go further by bulking out meat dishes with beans and lentils to dishes. It’s very simply, just adding a cup or can of cooked beans or lentils will double the amount servings of your dish. Just be sure to add extra spices.
I’ve now learned to cook just about anything from scratch, including authentic Vietnamese pho in the slow cooker.
#4 Stop eating out
For many people eating out becomes a reflex action. Tired in the evening? Get takeaway. Friday night? It must be going out night.
This was my biggest expense, and now it doesn’t even get a line item because we do it so rarely.
Making your home and dining area more comfortable helps to stop eating out.
#5 Buy 2nd Hand (everything)
With a youngster in the house, its always tempting to buy him cute new clothes (I love scandi clothing, it’s more of an obsession) but it’s really easy to run up a big bill just buying a few items.
Now when he needs new clothing I look at gumtree, facebook marketplace, and facebook groups to find preloved but good condition clothing for him.
#6 Sell your excess
Have you ever heard the saying, ‘you don’t own your things, your things own you?’
If you think about it, it’s true. We’re burdened with stuff. So, much, stuff.
Now, instead of using income to purchase new clothing or more stuff, I find something to sell.
This has a two-fold benefit, in that I get to remove something from the house that is no longer used AND I get to purchase that new thing. It’s a win-win.
Before I did the no spend month, I read a great book called Frugal Hedonism. The book had some really good advice about how to quit spending and opt-out of the capitalist mentality. The biggest takeaway though was about how to stop spending on entertainment.
#7 Find Free Entertainment
They made the point about having a third space to spend your time, which costs nothing.
For us, this has been my son’s Nanna’s house, and the local library.
We make it a weekly tradition to have breakfast at Nanna’s place. Everyone comes, even our dog!
The local library offers regular playgroups and even a toy library. I bring my made-at-home coffee and my son spends ages choosing a toy to take for the week. All for free. Another easy win and a day without spending.
Do you have any more tips to add on how to live on one income? Let me know in the comments!