5 Tips for Single-Income Households in a Challenging Economy

Frugal living, such as making food from scratch, opens up new venues for meaningful experiences. Biba Kayewich

Have your grocery runs been busting your budget lately? You’re not alone. Data from 2024 indicate that grocery prices have jumped a stunning 25.8 percent since November 2020, and many Americans are feeling the pressure. Take eggs, which have shattered their old highs: a carton of eggs that cost $2 in November 2020 increased to $3.08 in March 2024. This is just one example of the inflationary trend we’ve all witnessed these past few years, which makes it harder to acquire the basic necessities of day-to-day life.

Such trends hit single-income households particularly hard. Because our economy is now built for dual-income households, single-income households generally have less cash to work with. They also face the worrying possibility of losing all income if the working parent loses their job. As the economy has transformed over time, the number of sole breadwinners has dwindled, but even today, many families take this approach, often for good reason.

If only one parent works—traditionally the father—the other parent can remain home with the children. The stay-at-home parent can provide them with extra care and attention, which often leads to a more flourishing home life and the development of strong family bonds. This is one reason my wife and I chose to build our household around one income stream instead of two.

Families who choose this route may sacrifice some financial gains for the sake of family life and childrearing, but they consider it well worth the effort. The aim of this article is to help such families better navigate the financial challenges of supporting a family on one income. Here are some tips:

Bolster Your Emergency Fund

Single-income families may need to plan ahead more than their dual-income counterparts. Certified financial planner Daniel Estenson of Bernicke Wealth Management told The Epoch Times that single-income families need to counteract the risk of losing their entire income in one blow by stashing more cash.

“Having a larger emergency fund set aside, probably a year’s worth of expenses, would be something to think about there,” he said. “In the event of a job loss, you’re not in a situation where you have to find a job next week or you’re not going to keep the light bill paid.” While every family should have an emergency reserve, it’s especially important for single-earner families, according to Estenson.

Consider Disability Insurance

In the same vein, Estenson recommends looking into long-term or short-term disability insurance policies to offset the possibility of loss of income. Many employers offer these types of plans, but even if your employer doesn’t, you can still find individual plans through an insurance agent or broker. If the sole breadwinner becomes unable to work due to illness or injury, the family will have something to fall back on.

Bring on the Budget

Budgets aren’t exciting. They’re not shiny, fun, or novel. But, like a battered old hammer, they get the job done. They’re a critical tool for households living on tight margins.

While the concept of budgeting may not be new, some of the tools for budgeting are. My wife and I love an app called Qube Money. Qube Money is the cash envelope system for the digital age. Rather than placing physical bills in separate envelopes for different spending categories (groceries, gas, electricity, entertainment, et cetera.), you place funds in digital containers called “qubes” within the Qube app. You spend from those qubes using a single debit card. Open the qube you want to spend from prior to the transaction, or categorize the transaction afterward.

Either way, my wife and I have found that dividing the paycheck up into containers ahead of time and spending from those containers is by far the most effective budgeting method we’ve ever used. Throughout the month, we can see exactly how much money we have left in each category, and we almost never spend more than we’ve budgeted.

Using the Qube debit card also helps us avoid the pitfalls of credit cards, which, as Estenson warns, easily lead people to overspend. “What I see with my clients is [that] using the credit cards tends to increase spending on average,” he said. “That would be a good reason to have a budget.”

Whether you make use of old-fashioned pencil and paper or newfangled software, be sure you are tracking transactions and setting limits in some way.

Embrace the Joy of Simple, Frugal Living

Family entertainment doesn’t have to zero out your bank account balance. Much like dating, family bonding doesn’t depend on the money spent, but rather on investments of time, love, and a little creative thinking. By simplifying expectations, we open up new avenues for meaningful and memorable experiences.

Consider these simple, free, or low-cost activities: hiking at a park, checking out the library, visiting a pet store or a livestock sales barn, reading books aloud, playing board games, learning a new hobby, holding a backyard baseball game, hosting a barn dance, or making food from scratch. One way to a happy life is taking pleasure in the little, simple things.

There are many avenues for frugal living, beyond just family entertainment. There are frugal techniques for grocery shopping, getting around, cleaning, managing the household, and more. A frugal lifestyle makes life on a single income more viable while also providing benefits like simplifying life and focusing more on what matters.

As Toni writes on her blog Simple Frugal Life: “By living frugally I have less mental and physical clutter and less worry and stress. Life is complicated, but by simplifying my life it feels more manageable now. … When I earned a lot but spent my money, I took things for granted and was unaware of nature and all the good things around me. ... Now I am grateful for the small things and am mindful of the beautiful world around me.”

Don’t Neglect Saving for Retirement

With so many bills and expenses draining away each paycheck, it can be hard to find liquid financial resources to set apart for the future. But Estenson insists that single-income households shouldn’t forget to save for retirement. He says:

“Make sure that you are putting a little bit away for retirement ... for the folks that have access to retirement plans through their employers like 401(k) plans or 403(b) plans or any of those different types of accounts, at a minimum everybody should be contributing at least enough to get any matching contributions from their employer, and obviously try to do more than that as you’re able.”

The exact percentage to set aside for retirement varies from one family to the next, but Estenson says the 10 to 15 percent range is a good target.

Estenson said he believes Roth IRAs are especially helpful for single-income households.

“If you have a married couple and only one spouse is working, the nonworking spouse can put money into a Roth IRA based on their spouse’s account ... the nonworking spouse can still save for retirement through those Roth IRA or traditional IRA accounts,” he said.

Can single-income households make it, in spite of depressing headlines and rising prices? According to Estenson, the answer is yes. Investopedia recently reported that the American dream—including owning a home, a new car, and paying for annual vacations, college for two kids, and retirement—now costs $4.4 million, $1 million more than the typical individual American earns in their lifetime, but Estenson said he is skeptical of the report. He still has hope that the dream is achievable even for single-income earners.

“You have to take a pretty big grain of salt with some of those things that you see,“ he said. ”I think it’s all relative to your lifestyle and where you live. ... In a lot of areas of the country, you don’t need to have anywhere near that type of money to live a pretty nice lifestyle.”

Keeping your head above the tide of inflation can be a daunting and stressful struggle. But with forethought, strategic thinking, and discipline, it’s very possible. Even in today’s economic climate, families can not only survive, but thrive, living a comfortable and joy-filled life through responsible financial decisions.