In this day and age, can two people live on $25,000 a year?
After all, you could quickly and unexpectedly find yourself in this difficult position. One of you could lose your job or you’re just starting your career and working for minimum wage.
The quick answer to this question is yes—two people can live on $25,000 a year. But it would be very difficult if you had a mortgage, auto loan, credit card debt or student debt.
Plus, you would have to live in an area with a low cost of living. For example, you might be able to do this if you live in a rural area in Nebraska or Kansas. However, you would need a lot of luck to get by on $25,000in an expensive city such as Chicago or New York.
How To Live On $25,000 After Taxes
To live on $25,000 a year after taxes, you would have roughly $2,083 a month to pay for everything —food, rent, medical bills, other necessities and leisure activities.
That doesn’t leave a lot of room for error. Something as simple as a car breakdown could tip your budget into the red. Not to mention an unexpected medical expense, which could throw your budget out the window. Catching up might take years on such a limited income.
So, to make this work, you have to develop a budget and stick to it religiously. For example, you might allocate:
- 45% — or $937 a month — for housing (rent or mortgage payment and utilities)
- 15% — or $312 — for transportation
- 25% — or $520 — for living (food, entertainment, clothing, gifts, cellphones, etc.).
You might budget 15% or about $312 for debt repayment. If you don’t have debts, this could go into an emergency savings fund. If something happens, you’ll be prepared to cover the unexpected expense without breaking the bank.
Soaring Inflation – And Where It’s Easier To Live On $25,000
Of course, it was certainly easier to live on $25,000 a couple of years ago than it is today.As you’re probably aware, by simply going to the grocery store and paying more for everything, Inflation has soared to 40-year highs.The bad news, costs are expected to rise in the foreseeable future.
The rising cost of living means you will have to cut back on key expenses even more than in the past. But this is more doable than you probably think.
Can You Stay On A Budget This Strict?
While the two of you could live on $25,000 a year, it would mean staying on that budget with no exceptions if you want to stay out of debt.
So, you might have to sacrifice a lot of weekend getaways or vacations. You would have to be very careful in your gift giving and it would help if you skipped the car and instead relied on public transportation.
In other words, it would be a very no-frills budget.
If none of this sounds like your cup of tea, remember that you don’t have to settle for this lifestyle. There are many things you can do to improve your financial situation.
The best way to improve it is by boosting your income. Perhaps you could take on a part-time job – after all, employers today are desperate to find workers. There should be no shortage of opportunities.
Another option is to find a side hustle, from reselling items on eBay to driving for Uber.
For example, it’s not unheard of for folks to supplement their income to the tune of $1,500 a month or more simply by reselling yard and estate sale items on eBay. Don’t be surprised if you sell something for double or triple the original purchase price. While it takes a good eye and patience to find that hidden treasure, it could pay you back in spades.
Seize opportunities wherever you find them. Bringing in more money helps you enjoy those extras in life, such as a vacation or a weekend getaway.
Could you live on $25,000 a year? Probably, if you absolutely had to. But there is no need to do so when the opportunities to make more money – and to live more comfortably – are all around you. All you need to do is look.
Content Disclaimer:
The content provided is intended for informational purposes only. Estimates or statements contained within may be based on prior results or from third parties. The views expressed in these materials are those of the author and may not reflect the view of National Debt Relief. We make no guarantees that the information contained on this site will be accurate or applicable and results may vary depending on individual situations. Contact a financial and/or tax professional regarding your specific financial and tax situation. Please visit our terms of service for full terms governing the use this site.
