Let’s just cut to the chase. We live off my husband’s income of roughly $52,000 a year. I say “roughly” because his regular paychecks actually equal $40,125.83 a year because after taxes come out that’s what’s left… Lots of folks wonder how it is that we survive as a family of five with two dogs now living in the most expensive part of the country (seriously, go look at how much the cost of living here in the metro Atlanta area has ballooned too 😭) on a small income.
The simple answer is we worked our tails off to make it happen. This isn’t the result of luck. It’s the result of YEARS – nine years to be exact of trying, failing, and figuring out how to get good with money. So if you’re brand new to trying to make a less-than-stellar income work give yourself grace because it takes work.
1. Do a Spending Review
No one likes doing a spending review. No one wants to come face-to-face with where they are mismanaging their money. Heck, I just did a spending review to get us ready for summer and realized that we were still paying for Peacock!! We only got Peacock so we could watch the Superbowl earlier this year! That means we’ve been paying for a service we haven’t used for over 4 months! Sure, you could argue that $4.99 a month isn’t that big of a deal but spending a total of $19.96 for something you haven’t even used is definitely a big deal! Not to mention the way inflation is eating up our money, we need to hold on to every bit!
So keep your eyes on your money and pay attention to where you’ve been spending your money. Head here to my YouTube channel to watch a tutorial on how to do a spending review.
2. Budget Every Paycheck
It doesn’t matter how you get paid you need to budget every paycheck. You need to plan how you want your money to flow in and out of your home. This is why first doing a spending review is so important because you’ll be able to identify the weak areas in your money management and begin to make positive changes. Be ruthless in your spending review and ask the hard questions to determine if an expense is really worth it to you or not.
I’m a huge fan of the Quick Start Budget that I detail in my book because it puts your money in focus every time you get paid. I’m also a huge fan of setting a date on the calendar every week where you go through and update your budget, review your spending, review your savings, etc. For years this has been Sunday nights after the kids go to bed for us. Pick a day that will work for you and schedule it! Go and actually put it on your calendar! Seriously, it won’t happen if you don’t schedule it!
I no longer share my family’s actual budget online but the last one I shared is still live here.
3. Build Your Safety Net
There’s literally no way my family could survive the ups and downs of life without a safety net. I’m willing to bet that no matter your income your family probably can’t survive too long without one either. That’s why you need an Emergency Fund. This isn’t optional. You must have one. I know some folks don’t like seeing big money numbers in their bank account because they would rather invest the money – and you definitely should be investing your money BUT, the purpose of an Emergency Fund is to be a safety net. It’s not meant to earn you mega bucks. It’s meant to protect you when life gets sideways. That’s it. That’s the goal.
For more on how to build a Starter Emergency Fund head here.
4. Debt Eats Your Income
Yep. You read that right. Debt destroys your chances of getting ahead. I know, I know there are a lot of folks that talk about “leveraging other people’s money” to make yourself rich. But seriously friend. If you are saddled with debt your paycheck isn’t going to go very far. The biggest pay raise we ever got was when we got rid of my fully-loaded 2008 Tahoe (and its accompanying $18,000 loan) for a very well-loved paid-in-cash 2001 Sequoia. We saved over $400 a month just by getting rid of that car! That $400 was beyond helpful as we were struggling to pay for all the baby things at the time.
So do yourself and your family a favor and dump the debt. For more on how to get started paying off debt, head here.
5. Meal Plan
I know this seems like a weird caveat but honestly, our money wouldn’t go as far as it does if I didn’t meal plan our meals every week and work hard to stick to our grocery budget. And if you’re living in the year 2022 chances are you’re feeling the effects of inflation on your grocery budget as well. This post goes into more details on how to effectively meal plan and this workbook here gives even more tips and tricks along with a 4-week meal plan and recipes are included!
BUT (and it’s a big but). All the meal planning in the world isn’t going to do you a hill of beans if you don’t actually eat the food that you buy. Learn to eat what you buy and stop throwing away that food – because guess what? Every time you throw food away you are literally throwing money away. You’re throwing hours of your and/or your spouse’s work-life away by not eating what you bought.
These are just some of the things that we’ve done through the years in order to live well on a small income as a family of five. The greatest takeaway here is to get creative. Be willing to sell off the stuff you don’t need and use the profits to help you get ahead (pay off debt or save up an emergency fund).
Other Ways to Live on a Small Budget
- Be willing to say “no” when something comes up, and you don’t have room in the budget for it.
- Get ruthless and slash everything in your spending that you don’t need. Downgrade cell phone plan (we use Mint Mobile and love it). Downgrade your internet plan. If you work from home, check with your CPA about setting up an Accountable Reimbursement Plan with the IRS so you can write off some of these expenses.
- Use your library – no need to pay to buy books to read or listen to!
- Schedule at-home date nights. Living on a small income does not mean sacrificing your relationships. Schedule date nights at home. Invite friends over for a potluck.
- Shop secondhand first instead of last.
- Use cashback apps and websites like Rakuten, Swagbucks, and Fetch to earn cashback or points towards gift cards to help stretch your budget.
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