Are you making great money in your double income household but feel like you’re still struggling financially? Are you in a DINK (double income no kids) household but feel like you might as well have 3 or 4 kids based on your spending?

Perhaps your savings rate is low or you feel like you’ll never be ready for retirement. If you’ve got two incomes to work with, why not explore the possibility of living on one income so you can save and invest the other?

Why exactly would a family want to live on only one income when there’s plenty to go around on in a two-income household? Simply put, the time value of money is a powerful tool when it comes to saving more money.

For example, if a family could just save $25,000, after 30 years that money would grow to around $143,000 at a 6% annual compound interest rate even with no further contributions! You may not like the idea of living on one income, but you can’t deny the power of the math that works in favor of those who choose to save more of their income.

If you are fortunate enough to be among the 60% of American households with two incomes, you’ve got a robust wealth building tool at your disposal: two incomes. In a two-income household, there’s more potential for saving and investing that can make a huge difference in the long run. Even if you aren’t great at picking the best stocks, mutual funds or other investment instruments consistent, continual contributions can add up quickly.

Elle Martinez, host of the popular podcast, Couple Money and author of Jumpstart Your Marriage and Your Money, says that living one income has really changed the way they live in a good way, “One of the most impactful decisions we made as a couple was keeping our essentials to one income.”

In addition to boosting her family’s savings, living on one income helped them reach a number of other important financial milestones, too. “It’s been incredible as we were able to have fun now while accomplishing some big goals like paying off our car loan, becoming self-employed, and preparing to become parents.”

The only downside to this approach is that many people believe saving an entire income might be too out of reach for them. The beauty of the “one-income” plan is that it’s flexible and can be adapted for different situations. It’s not an all or nothing endeavor.

There are many ways to work out living on one income. The key is to find an approach that works well for your family. If living on one income appeals to you, here are some ideas to explore and get you started on that path.

Create a Vision

Before making any lofty plans or declarations of extreme, likely unsustainable austerity in the name of one-income living, create a vision. In other words, what does life look like with X amount of money in the bank 5,15 or 30 years from now.

A vision will reinforce your “why.” Without a strong reason for living on one income, it’s unlikely that you’ll be motivated to maintain a single-income lifestyle for very long. Come together with your partner and figure out what you’d like your money to do for you. If possible, cast a vision regarding individual goals as well as team goals that you can both benefit from.

This is a fun part of the planning process, so be creative and try not to hold back. Whether you have dreams of retiring early, going back to school or living on a Caribbean island, put it in writing. Keep this vision handy so you can revisit it and remain inspired to stay the course.

If you feel like this step is too abstract or “hokey” for your taste, consider creating concrete goals and action steps that support your vision. Add timelines, dates or other specifics to transform your money vision into a plan with actionable steps.

Looking for a financial advisor to help put your vision into a financial plan? Let GuideVine.com help Find the Right Advisor for you!

Create Your Plan

As mentioned above, once you’ve penned the vision, it’s time to get a plan in place. If you need help creating the plan that supports your vision, a budget is a great place to start. A budget is a spending plan that directs your money each month.

A budget is very different than looking at your spending after it’s occurred (like balancing a checkbook or looking at past transactions to determine spending patterns.) A budget is proactive and gives you a spending cap on certain categories before you spend.

If you’ve set your budget at $100 for entertainment in a given month, then your budget will tell you to stop spending once you’ve reached that amount in that category. You can use pen and paper to create and track your budgeted spending or use any number of apps designed for the same purpose.

Once you’re able to stick to a spending plan, you’ll likely find more money to help you live well, even on one income. There are some families that get into couponing to save on groceries. Others swap out cable TV for less expensive online streaming options. Then, there are still savings to be had shopping around for lower insurance rates or appealing property taxes.

The point here is to find ways to reduce your planned spending, so that you can put more of your money to work in savings. The less you need in your regular household spending, the more you’ll be able to live on one income much easier.

In addition to paring down the household expenses, it doesn’t hurt to add extra income to equation. Adding a side-hustle to support a single income can be a huge help, too. With a combination of spending less and earning more, you can see how living on one income can not only be bearable, but it can be somewhat comfortable once you create a plan that involves spending less and earning more.

Start Small

Many people don’t attempt to live on one income because it’s difficult to cut back right away. If living on one income will represent a 50% or 60% decline in your spending (and lifestyle.) It might be a little drastic and therefore, unsustainable to start allocating 100% of an income to savings.

To start living on one income, it’s perfectly acceptable to begin putting away a small part of your partner’s income. You can use a percentage or dollar amount to set aside your contributions and increase them as time goes on. This process will give you time to adjust your spending and slowly get used a lifestyle with that requires more “creative frugality” than your family might be used to.

Tax Implications

Anytime you make big changes to your spending and saving, you’ll want to be aware of the tax implications in the near and long term. If you’ll be socking away your money in tax-advantaged accounts, the good news is that you could potentially pay less much less in income tax in the years you make your savings contributions.

On the flip side, if you are saving up an entire income, you could have quite the nest egg come time for retirement. In this scenario, you could be at risk for paying higher taxes in the years you withdraw your savings.

Due to having higher income in those years and being in a different tax bracket later in life, you could pay more in taxes on that income. Additionally, if your employer is matching, say your 401k contributions, then you could potentially have even more money to be taxed in your later years.

This is where you’ll want to leverage certain investment vehicles that will help reduce your tax liability. Work with an experienced financial planner or financial advisor who can help you determine a tax strategy based on your amped up savings strategy.

Time for Fun

Now that you’ve reached your money goals, you don’t want to spend frivolously and undo all the hard work of saving an entire income. You also don’t want to be stuck in miser-mode refusing to spend or withdraw any of your earnings. Make sure you take time to enjoy the fruits of your labor by living the life you hoped saving an entire income would provide.

If you’re not sure what to do, defer to your vision and related plans that started it all. If it includes vacation, take a vacation. If it includes charitable causes your family is passionate about, write those donation checks. Either way, your 20-or 30-years-from-now self will thank you.

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Aja McClanahan

Aja McClanahan

Aja McClanahan is a writer and blogger who covers topics on personal finance and entrepreneurship. She writes regularly on her blog, Principles of Increase, and various other web outlets. Follow Aja on Twitter and Principles of Increase