Can you live on one income?
If you鈥檙e in a dual-income household, could you make ends meet if one of you simply deposited your entire paycheck into savings and investments for the future?
If your 鈥渋ncome鈥� is just the amount coming home from one wage earner, then your lifestyle will shrink to fit it, Hamm writes.
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For the last few years, Sarah and I have established a very simple goal.聽We live entirely on the larger of our two incomes and sock the聽entirety聽of the other salary into savings.聽So far, we鈥檝e basically been able to pull this off.
Why do this? There are three big reasons.
贵颈谤蝉迟,听it establishes a聽very聽clear baseline for our savings for the future.聽We know that one of our income streams is going entirely to savings, which means we can essentially exclude that from our living budget. There鈥檚 no questions about how much we should save and how big of an element it should be in our budget. Instead, our budget involves a very tiny amount for savings (mostly just growing our emergency fund).
厂别肠辞苍诲,听it means we鈥檙e saving a聽lot聽for the future.聽We decided long ago that we were going to strive to 鈥渞etire鈥� as early as possible, which essentially meant that we would follow some life goals that didn鈥檛 revolve around earning income.
We want to spend quite a few years doing volunteer work while we鈥檙e still physically able and mentally sharp. I鈥檇 like to spend some significant time focusing on fiction writing, which isn鈥檛 a real lucrative path if you鈥檙e needing a strong income stream. Our savings plan enables us to work toward this goal very effectively.聽
On top of that, this type of savings is going to make our dream of being able to travel internationally with our children when they鈥檙e older much, much easier. We would like to go on several international trips with our children during their teen years, which is going to be pricy. We now know we will be able to swing this dream.
罢丑颈谤诲,听it keeps us frugal.聽We don鈥檛 have tons of excess money to spend, even if we wanted to. It doesn鈥檛 even go into our main checking account. Frankly, we don鈥檛 need that excess money to enjoy life. I鈥檓 sure we could find ways to spend the income we鈥檙e saving, but that spending really wouldn鈥檛 add to our quality of life in any significant way.
Our current budget does reward us for active day-to-day frugality. We still have financial motivation to buy generic items, to look for ways to use less energy, and so on. We see the rewards for this much more directly than if we were earning a lot more and didn鈥檛 have to think nearly as much about our bills.
The question then becomes聽飞丑别迟丑别谤听you聽could do this.聽If you鈥檙e in a dual-income household, could you make ends meet if one of you simply deposited your entire paycheck into savings and investments for the future?
Even if it seems mighty challenging or even impossible, I encourage you to at least sit down and check as to whether or not you could do this. A few tips if you鈥檙e considering this kind of approach:
贵颈谤蝉迟,听assume that you鈥檙e going to cut back on the frills of your lifestyle to make this work.聽Some of the more unnecessary expenditures in your life will have to go. Everyone has different routines and different expenditures, but we all have things that are less necessary and important than other things. Likely, you鈥檒l have to make some big decisions to make this work 鈥� cutting back on frills and probably even cutting some big things, like downsizing your home.
厂别肠辞苍诲,听your lifestyle often expands 鈥� and shrinks 鈥� to fit your income level.聽If your 鈥渋ncome鈥� is just the amount coming home from one wage earner, then your lifestyle will shrink to fit it. The shrinkage might be a bit uncomfortable, but it will become natural over time.
罢丑颈谤诲,听the entire process becomes easier if you have some big goals in mind.聽Whenever I think about our future plans, I picture two things. I picture our daughter at the Eiffel Tower (something she鈥檚 already obsessed with, even in her early childhood), and I picture Sarah and myself on an Appalachian service project. Those two pictures in my mind help me to keep moving forward.
贵颈苍补濒濒测,听it can really push you to increase your income.聽Whenever your income feels tight, you feel a lot more motivation to get out there and find new ways to earn money. It鈥檚 a lot easier to run faster if you can feel the wolves nipping at your heels.
This kind of move is the kind of big, audacious step that can make a life-changing difference for you and your family.
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