Having dinner with friends last week, we were discussing the recent changes in our lives. Having finished uni, moved into creative fields, gotten ‘real’ jobs, met serious partners, our finances are remarkably different to when we were all pooling for a jug of beer. For many of us, our cost of living and expenditure has increased simultaneously to our increasing income, meaning we’re earning more but not necessarily saving any extra. Which is why the idea of living off 50% of our pay is an appealing, and financially inviting prospect. But could we do it?
Certainly, if you’ve got two incomes coming into the house, it’s worth thinking about trying to live off one. Living off one income generally only includes necessities- rent or your mortgage, food, bills. If you can cover all your essentials from one income, it leaves you with the space to save most of the second income. It also allows you to spend some of the second income on entertainment, or save part of it for a trip, without undermining any of your financial prospects. It’s also a great protection should the unlikely happen, and one partner lose their job.
Out Of Sight, Out Of Mind
If you’re living off one wage, it’s still possible to live off 50% of your income. The first step is to sequester as much money as possible. This means that, as soon as your pay comes in, automatic deductions get it out of harm’s way. If you’re great with money, that might not be necessary. Unfortunately, I’m the type of spender who will get a week’s worth of entertainment money out at the ATM and proceed to spend it within three days. In order to fight against my lesser demons, I automatically move about 40% of my pay each week. How you organise it is up to you, but a combination of retirement contributions and savings are the most obvious destinations, unless you have credit card debt, in which case it should figure heavily also. Whatever I don’t spend of the remainder of my pay, I’ll move by the end of the week. It is the definition of stress-free finances- there’s always enough money if you want to splurge or save up for something quickly, or need upfront capital.
Easiest Places To Find 50% Of Your Income
Here are some of the quickest ways to reduce expenditure;
– Subscriptions. Cancel every subscription you don’t use a couple of times a week. This includes gym subscriptions, magazines you only read half of every week, every online deduction that comes out every month and you forget about it.
– One Meal A Week. Once a week, eat at home and give the restaurant a miss. Watch how your savings grow with just a small change in your expenditure.
– Car Pool. Ask around, to see if there is any way to reduce your petrol costs. Car pool with work colleagues, with other parents to get to Saturday sport, and with friends to get to the party on Friday night.
– Utilities. So much money is spent on utilities that aren’t necessary. Pay attention to keeping unnecessary lights off, keep showers shorter, rug up instead of hitting the heater.