Here’s an interesting question. In this day and age, can two people live on $25,000 a year? You could find yourself in this position if one of you loses your job or if you’re just starting out in life and working for minimum wages.
Yes, but
The quick answer to this question is that yes, two people could live on $25,000 a year. But here’s the big but, you would have to have no mortgage, no auto loan, no credit cards and no student debt. Plus, you would have to live in an area with a very low cost-of-living. For example, you might be able to do this if you lived in a rural area in Nebraska or Kansas but not if you live in a city such as Chicago or New York.
$25,000 after taxes
To live on $25,000 year, really means $25,000 after taxes. Given this, you would have about $2,100 a month for food, rent and other necessities. This could possibly be enough if you don’t own a car because if you did, there would be additional expenses for gas, repairs and insurance.
You would need to budget
To make this work, you would have to develop a budget and stay on it religiously. For example, you might allocate 35% or $730 a month for housing (rent or mortgage payment and utilities), 15% or $312 for transportation, 25% or $520 for living (food, entertainment, clothing, gifts, cell phones, etc.). You might budget 15% or about $312 for debt repayment or if you have no debts, this could go into an emergency fund.
Could you stay on a budget this strict?
While the two of you could live on $25,000 year, it would mean staying on that budget with no exceptions. It would also mean little in the way of weekend trips or vacations. You would have to be very careful in your gift giving and would probably have to rely on public transportation. In other words, it would be a very no-frills existence.
Increase your income
If none of this seems very attractive, you might be able to find ways to boost your income to something above that $25,000, which would give you extra money for some of those extras in life such as a vacation or a weekend getaway. One of you might be able to take on an extra shift at work or find a part-time job. One easy way to generate more income is to sell stuff on eBay or Craigslist. I read of one mother who is able to supplement her income to the tune of $1500 a month by finding things at yard and estate sales and selling them on eBay. Another woman was able to earn extra money by finding items at estate sales in the higher-end part of her town and then selling them at garage sales in her lower income neighborhood.
Become a caregiver
There is a growing need for caregivers due to the aging of the baby boom generation. These jobs don’t pay a great deal but can usually be either full- or part-time so they offer a degree of flexibility. There are also sometimes jobs available for part-time nannies where they pick up the children of working couple families and transport them to their after-school activities, to the dentist or help entertain them at home for a few hours.