Skip to Content

This post may contain commission-paying affiliate links. As an Amazon Associate I earn from qualifying purchases. Learn more in our disclosures.

Here’s How Anyone Can Live On Half Of Their Income Or Less

how to live on half of your income above dad and daughter laying on bed smilingLiving on less than your income may seem like a very difficult task to complete.

We thought the same thing until we realized that we have been living on less than half of our income this past year.

While the concept of living on half of your income or less is a simple exercise on paper, it is much more difficult when you introduce the human element into the equation.

Luckily, there are some actions you can take to make living on less than half of your income easier.

I’d like to help you get to that point if that’s your goal.

Even if you only want to live on 70% or 80% of your income, these tips will help you get there.

Two Ways to Live on Less Than Half of Your Income

There are only two ways to make living on less than half of your income a reality. The first way is to increase your income until your expenses are less than half of your income.

Alternatively, you can cut expenses until your expenses represent less than half of your income. These concepts are both easy to understand but can be difficult to pull off.

Living on Less

Living on less seems like the easier of the two options initially, but it isn’t for everyone.

You can see immediate results by spending less starting today, but continuing to live on less may be difficult for some as you begin to miss the things you have cut from your budget.

Other people will realize that they don’t miss that extra spending at all. In this case, cutting expenses may be easier. Really, it varies from person to person.

Decreasing Variable Expenses

When looking to live on less, immediate results can be found by decreasing expenses that vary from month to month or expenses that can be canceled immediately.

You’ll want to look at cutting back on things like eating out at restaurants, even for your lunch at work. Next, look to cut back your grocery spending by shopping smart and by avoiding food waste like throwing away leftovers.

Another place to look to cut your variable spending is with subscriptions. First, cancel any subscriptions you don’t use at all. Then, look to cut other subscriptions that don’t provide enough value for the money you pay.

Really think hard about things like magazine subscriptions, cable TV (which I personally will never cancel), Netflix, Amazon Prime and cell phones (we switched to Republic Wireless and save hundreds of dollars a year).

You can also reduce your spending immediately with some of your car expenses. Shop around for car insurance to see if you’re really getting the best rates. This could be a quick big win.

Another way to save is to be more mindful of your driving habits to reduce your gas consumption.

Decreasing Fixed Expenses

Once you’ve cut the easier variable expenses, you’ll need to think hard about cutting your fixed expenses.

Fixed expenses include things that are difficult to change, such as your monthly mortgage payment or rent, your car payments, student loan payments and any other expenses that don’t vary by much and are difficult to change.

While it may not seem like you can change these expenses, you can. It just takes dedication. Making these changes can pay off huge, especially in the long run.

Think about it, these expenses are your biggest expenses every month. If you reduce them even by a little bit, you’ll be saving a big chunk of change every month.

First, if you owe money on your car, consider selling your car. Take the proceeds (after you pay off the loan) and buy a more affordable car that doesn’t require a monthly payment.

If that isn’t possible, you could at least get a car that has a smaller monthly payment.

Cars are built to last for much longer these days, so even a cheaper car could last you for many years. You’ll save both on your car payment and your insurance with this sacrifice. Additionally, if you buy a more fuel efficient car you’ll save on gas, too.

Next, consider changing the biggest expenses in your budget, your mortgage or your rent.

If you have a mortgage at a high interest rate, consider refinancing to save money on interest. Just make sure you don’t increase the term of your loan or else it will take you even longer to pay your house off.

An even better way to save is to move into a less expensive home by downsizing or moving to a cheaper area. Whether you buy or rent, this is a major lifestyle change that could result in some of the largest savings possible.

Make sure that you’d be comfortable living in a smaller home before you make the move because figuring out you moved into a home that was too small would be a costly mistake. Think about your current home and think of all of the wasted space before downsizing.

Remember, you’re paying for the extra space either through your rent or mortgage payment and you’re also paying to heat and cool that space. By eliminating extra space you’re saving in more than one way.

Alternatively, if you move to a cheaper area you can buy a similar sized, suitable home for a much cheaper price. Just make sure your income won’t be dropping at the same time or else you may end up losing ground financially.

These are just a few ways you can get started on living on less. For more ideas, consider checking out our post that highlights 123 ways to save money.

Earning More Money – The Other Option

If cutting your expenses doesn’t sound like a sustainable option for you or your family, then earning more money is the alternative if you want to live on half of your income or less.

Luckily there are multiple ways you can increase your income. On top of that, your income potential is theoretically unlimited. Only you limit how much money you can make.

Make More Money Through Part Time Jobs

The easiest way to start earning more money is to start earning extra income on the side. You can get a part-time job that you enjoy, start a small business or even do odd jobs around your community for extra money.

Part-time jobs may be fun for a short period of time, but unless you love the part-time job you work at, you may be looking for a way out after the job gets old.

However, for some people, this is the perfect way to increase their income enough to live on less than half of it.

Earn Extra Income Through Side Gigs

Side gigs and small businesses are a great way to start earning extra income. Think about what skills you have that other people need and you may have a side business idea to get started with.

The great thing about side gigs is the fact that they can grow into a full-time business that can increase your income even more than what you currently earn at your job.

Some ideas for side gigs include building websites for others, freelance writing, preparing taxes on the side during tax season, mowing lawns during the summer, fixing broken lawn mowers that won’t start in the spring, shoveling or plowing snow in the winter, tutoring and other freelance careers.

Get A Raise, Promotion Or A New Job

If you don’t want to put in extra time after work, then you may have to put in more time in your day job.

It takes hard work and time, but you can greatly increase your income at your current job by earning a big raise or promotion. Of course, you should only ask for a big raise or promotion after you provide enough value to earn them.

If your company has made it clear you’ve maxed out your potential with them, you may need to look for a better opportunity with another company.

Finding a new job that pays more may also allow you to spend less if you move to a lower cost of living area. Just be careful that it doesn’t limit your spouse’s earning potential or your own future career growth.

Don’t be shortsighted when it comes to your career for a quick financial gain.

Grow Investments Or Rental Property Portfolio

This option may take a bit longer to get to the point where you are spending less than half of your income, but it is the perfect solution for some.

Investments can provide income through dividends or through the growth of the investment themselves. Eventually, once you have a large enough investment portfolio, you may earn enough investment income to supplement your current income and live on less than half of what you earn.

Another option for investment income is through owning multiple rental properties.

As long as your rental properties are bringing in more money than they cost you, you can build a portfolio that will give you enough extra income to make living on half of your income a reality.

The downside is the fact that rental properties add risk if you have to take our mortgages. If you don’t rent them out you could end up losing money.

Additionally, if you get a nightmare tenant or a house that needs a lot of repairs, you could end up spending more than you earn from a particular rental property.

Becoming a landlord isn’t for everyone, but some people love it and make a lot of money doing it.

Defining Income And Expenses Can Be Tricky

This is where things get a bit tricky. What do you define as income and what do you define as expenses? Technically, income is every dollar you bring in and expenses are every dollar you pay out.

That said, many people say their take-home pay is their income, which causes a couple of problems.

First, you don’t get credit for any of your retirement contributions as part of your savings for accounts like 401(k)s or 403(b)s that come straight out of your paycheck.

Second, your taxes, health insurance and other payroll deductions are not counted as expenses since they’re taken out before you get to your take-home pay. Finally, you would be under-representing your true income even though you never see every dollar of it.

Ultimately, it is up to you to figure out if you want to use your real income or your take-home pay as the basis for living on less than half of your income. We personally use our total income.

Another thing to keep in mind is you might not live on less than half of your income every single month.

Some months may result in living on only 30% of your income. I think if you live on less than half of your income when you look at a full year, you can officially say you living on less than half of your income.

Regardless of how you go about living on less than half of your income, it is a very achievable goal. Even if you think 50% of your income is extreme, try living on 60%, 70% or 75% of your income.

Having all of that extra wiggle room will open up options for you down the road. It will allow you to grow your savings and investment. It could even allow you to retire early!

How much of your income do you live on? Do you ever think you could live on 50% or less of your income? Would you want to? Let me know what you’re thinking in the comments below.


Wednesday 17th of June 2020

I'll agree with Endre, Start slow and work up too 50%. I'm basically doing the 50/30/20 budget. Its hard sometimes too stick too it but it's working quite well.

Endre Fredriksen

Tuesday 13th of December 2016

Great article! If you're interested in saving 50% (approximately) of your income, consider starting with a smaller percentage and working up. Ex. maybe in year one you only save 10-15% of your income and the next year you save 15-20%. Starting small will help you adjust to living on less AND not feel super discouraged if you can't hit the "big" mark (50%) on year one.


Monday 10th of October 2016

Love the post. We live on less than we make! We live on 60k a year and make approx 155k a year. The remainder goes to taxes, insurance, savings, tithes, and 401k.

Lance Cothern

Thursday 13th of October 2016

Good for you Lachandra!


Wednesday 28th of January 2015

Whenever people tell me their savings rate, I like to know their income to put it in perspective. Saving 70% on $200K/yr is different thatn 70% on $80K per year. I like the idea of increasing income though at any income level.

Lance Cothern

Wednesday 28th of January 2015

I definitely understand where you're coming from. However, focusing on someone else's income is a waste of time and effort. Instead, focus on how you can grow your income rather than be jealous of someone else's. Definitely not saying you are, because you aren't, but that is the general comment others make.


Monday 26th of January 2015

We are currently living on 2 incomes, but, since husband's business wasn't too good for almost 2 years, I was the one to support it and our family. Weird enough, I had a slower end of the year and his business picked up. It's great to have 2 incomes, even better to be able to survive on one only, if needed.

Lance Cothern

Monday 26th of January 2015

That's awesome that you guys are able to help each other out when times are rough for the other. That's why living on less than you full income is so important.