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The term amortization is usually used to refer to the process in which debt is paid off on a set schedule, with fixed payments each month. An amortization schedule can show you the amount of your payment that goes toward the principal and interest each month. Because credit cards are considered revolving loans, amortization is not often used with credit cards.

However, a credit card amortization schedule can be helpful if you’re trying to pay down your balance. Understanding credit card amortization can help you decide how big your payments should be each month, as well as what the impact of additional credit card payments would be.

What Is Amortization?

Amortization is the process where debt is paid down on a set schedule, usually with fixed monthly payments. One common example is a 30-year mortgage — each month, you make a mortgage payment for the same amount.

Every time you make the mortgage payment, part of your payment is an interest payment, and part of the payment goes toward paying down your mortgage principal. Each month, as the principal balance goes down, more and more of your monthly payment goes toward the principal, until the mortgage is completely paid off.

Recommended: When Are Credit Card Payments Due

What Is Credit Card Amortization?

Because credit cards are considered revolving debt — meaning you can continually borrow and repay your debt — they don’t have amortization in the same way that a mortgage or car loan does. However, one area where a credit card amortization schedule may apply is if you’re trying to pay down a credit card balance.

In this instance, understanding the amortization schedule for your credit card can help you decide how making additional payments to your credit card issuer will impact your overall balance.

Recommended: How to Avoid Interest On a Credit Card

How Does Credit Card Amortization Work?

One of the credit card rules is that the higher your balance is, the more interest you’ll owe each month.

To be more specific, by only making the credit card minimum payment, it could take you many years to pay off your debt. If you’ve decided to rein in your credit card spending and pay down your balance, you can use a credit card amortization schedule to determine how long it will take.

Looking at credit card amortization will allow you to see how much less you’ll owe with each subsequent payment — assuming you’re no longer actively using your credit card. This schedule will take into account your current balance, your card’s annual percentage rate (APR), and how much you can afford to pay off each month. Then, you can determine how many months it will take until your balance is paid off in full.

Factors That Affect Credit Card Amortization

One of the biggest factors that affects a credit card amortization schedule is the interest rate on your credit card. The higher your credit card interest rate, the more of each monthly payment that will go toward interest. That will mean your amortization schedule will last longer.

Another factor to consider is the consequences of credit card late payments. If you delay credit card payments and incur late fees, that will increase your overall balance. That will also increase your amortization schedule and extend the length of time it will take to pay down your total credit card balance.

Guide to Calculating Credit Card Amortization Period

Since credit cards are considered revolving debt, it can make it difficult to calculate a credit card amortization period. If you continue to use your credit card for new purchases, you won’t be able to calculate an amortization period because your total balance will change each month.

One way you can calculate a credit card amortization period is if you decide to stop making any purchases on your card. If you have a $5,000 balance on your credit card, you can use any online amortization calculator and input the credit card payment amount you want to make each month. The resulting amortization schedule will show how long it will take to completely pay off your credit card, assuming you make payments by your credit card payment due date.

Debt Consolidation and Credit Card Amortization: What to Know

If you’re looking to lower your credit card debt, one option is credit card debt forgiveness. But because this isn’t always easy to get, another is to consolidate your debt by taking out a personal loan.

Unlike revolving loans which are what a credit card is, a personal loan is a type of fixed loan that has an amortization schedule. Following that amortization schedule lets you know when you’ll completely satisfy your debt obligation.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

The Takeaway

An amortization schedule shows how much of each loan payment goes toward interest and how much goes to principal. Because credit cards are considered revolving debt, they don’t have amortization schedules in the same way that fixed loans do. Still, you can use a credit card amortization schedule as a tool if you’re trying to eliminate your credit card balance.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What does credit card amortization payment mean?

If you’re looking to pay down or eliminate your debt, one strategy is to stop making any new purchases with your card. That way, you can concentrate on lowering your total payment. If you only make the credit card minimum payment each month, it could take years before you pay off your balance. Following a credit card amortization schedule can help pay off your debt sooner.

How can I calculate my credit card amortization period?

A credit card amortization period mostly makes sense if you stop making any new purchases on the card. If you’re still regularly using your credit card, your total balance will change with each purchase and payment. On the other hand, if you aren’t regularly using your card for new purchases, you can calculate your credit card amortization period using your total balance, interest rate, and monthly payment amount.

What is a credit card amortization term?

An amortization term is how long it takes to completely pay off a loan. If you’re making regular payments on the credit card payment due date each month, you’ll gradually lower your total credit card balance. A credit card amortization term can make sense if you are no longer actively using your card and focusing on eliminating your debt. You can use your total balance, interest rate, and the amount you’re paying each month to figure out how long it will take to eliminate your balance.

Photo credit: iStock/AmnajKhetsamtip

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You may or may not be able to reopen a closed credit card. More specifically, the reason why your credit card account was closed in the first place will make a difference, as well as whether your specific credit card issuer allows the reopening of closed accounts.

Though your request may get denied, it can still be worthwhile to ask to reopen a closed credit card account if you really want to do so. Here, a closer look at why your account may be closed and how to reopen a closed credit card account.

Can You Reopen a Closed Credit Card?

Whether or not you can reopen a closed credit card will depend on several factors, including:

•   The reason why your credit card is closed

•   Whether your credit card issuer allows cardholders to reopen accounts

•   How long ago the credit card account was closed

For instance, if the issuer closed your credit card account due to nonpayment, you most likely won’t be able to reopen it, given what a credit card is and the risk a lender assumes. However, if you chose to close the account yourself and now regret the decision, you may be able to get the credit card reinstated.

Why Your Credit Card May Be Closed

There are several reasons why your credit card may be closed, such as:

•   Your account was inactive: If you haven’t used your credit card in a number of months or years, your issuer may decide to close a credit card due to inactivity.

•   Your account was considered delinquent: Most issuers will close your account if you haven’t been paying your bills or are in default. Although the account is closed, you’ll still owe the amount borrowed when closing a credit card with a balance.

•   Your credit score dropped: Though not always the case, if a credit card issuer notices red flags, such as a sharp drop in your credit score or major negative remarks on your credit report, it may choose to revoke your card.

•   You didn’t agree to the new terms: Sometimes credit card issuers update their terms and conditions and need you to agree to them before continuing to use the new card. If you don’t agree to the terms, your card may be closed.

Recommended: Does Applying for a Credit Card Hurt Your Credit Score?

Reopening a Closed Credit Card Account

If you decide you want to reopen a closed credit card, here’s how you do it.

Review the Reason for the Account Closure

Assuming you didn’t contact the credit card company to cancel a credit card yourself, you’ll need to determine the reason why the issuer did. It’s most likely due to one of the five reasons mentioned above.

Consider when you last used the credit card, whether you’ve had to agree to new terms, or if you were behind on payments. Credit card issuers may not notify you when the account is closed, so if you’re unsure of the exact reason why, it’s best to contact them.

Gather Relevant Documentation

Before asking the credit card issuer to reopen your account, it’s best to be as prepared as possible so you’re as efficient as you can be. For one, you’ll need to ensure that you have the credit card account number — you can find it on your physical credit card or a previous credit card statement.

If you were delinquent on your account, you may need to provide other forms of proof, such as documentation like that you’ve paid back the credit card balance you’d owed. Your card issuer may also want other information, like your full name, address, and Social Security number.

Contact Your Card Issuer

Finding the best number to call can be as simple as checking the back of your physical credit card or looking up the issuer’s phone number on their website. Otherwise, you can try calling your credit card issuer’s general customer service number and asking to be transferred to the relevant department.

When you request to reopen the account, you may be asked to provide a reason why you want to do so. Additionally, you may need to address any concerns or issues that caused your account to get closed. For instance, if your card was closed because you didn’t agree to new terms, then you’ll need to do so.

If your request is approved, you should receive information about the account, such as whether the account number is the same and if you can keep any rewards you’d earned before the account closure. Some issuers may conduct a hard credit inquiry to make sure you can still qualify for the credit card in question.

Things to Know When Reopening a Closed Credit Card

If you’re reopening an account you held previously, you might find some differences in how a credit card works. Here’s what to look out for specifically if you reopen a closed credit card.

Fees and Interest Rates May Be Different

The annual percentage rate (APR) and fees for the credit card may have gone up or down. Before you reopen your account, it’s best to check all of the card’s terms and conditions to determine whether you want to proceed.

Recommended: How to Avoid Interest on a Credit Card

Your Credit Limit Might Be Lower

Depending on the issuer and other factors like your credit score, your credit limit may be lower than the original amount you were approved for. You may have to wait a few months or demonstrate that you can adhere to key credit card rules, like consistently make on-time payments, before you’re approved for a larger credit line.

Recommended: What is the Average Credit Card Limit?

You May Lose Out on Previously Unused Rewards

If you’d racked up rewards before closing your credit card account, you may not be able to access any unused points or miles after your credit card gets reopened. However, it doesn’t hurt to ask the credit card issuer if it can reinstate the rewards — though remember there’s no guarantee it will happen. This is why checking your credit card balance and your rewards balance is important to do before closing out a credit card account.

How Long Does a Closed Account Stay on Your Credit?

How long a closed account remains on your credit report will depend on whether it’s based on a negative remark. For accounts that were in good standing, the closed account can remain on a credit report for up to 10 years and will generally help your credit score. However, if the closure was due to an adverse remark, such as delinquency, it could remain on your report for up to seven years.

How Closing a Credit Card Can Hurt Your Credit

The decision to close a credit card can weigh negatively on your credit score. Specifically, here’s how closing a credit card affects your credit:

•   Increases your credit utilization: Once a credit card is closed, your overall credit limit is lowered. This typically increases your credit utilization ratio — the percentage of your total available credit that you’re currently using — even if your credit card balance remains the same. A high credit utilization ratio can lower your credit score.

•   Decreases your credit mix: Though it may not affect your credit score that much, closing a credit card means there may not be as many different types of credit in your credit history. If so, this could affect your score negatively depending on the other types of accounts you have.

•   Potentially lowers the average age of your credit accounts: If the closed credit card account was one of your oldest accounts, it could lower the age of your credit history. This can negatively affect your credit score.

Reopening a Closed Credit Card Account vs Getting a New Credit Card

Although there may be advantages to reopening a credit card, such as accessing a high credit limit or offered perks, you’ll have to open a new one if your issuer refuses your request. You might also look into getting a new card instead of going back to your old one if you think you could access better rewards or more favorable terms than your closed card offered.

Whatever your needs and credit score are, it’s best to do some research to find a card that you have a high chance of qualifying for and that offers features you want.

When Not to Reopen a Closed Account

Sometimes, it’s better to leave a closed credit card account closed. Instead, you could use the account closure as an opportunity to search for a better credit card that may have a lower interest rate or offer better rewards, for instance. You could even look into options offered by the same credit card issuer.

Plus, there are some valid reasons for when to cancel your credit card, like if it had an unnecessarily high annual fee. In those instances, it’s likely not worth second guessing your decision.

Alternatives to Consider if You Can’t Reopen Your Account

If you can’t reopen your account, you’re not out of luck. Here are some other options to consider in this scenario:

•   Consider applying for a different card with the issuer. One option is to see what other cards your issuer offers and open one of those instead. Before submitting an application, check to see what the terms and conditions are and whether it has the features you’ll want and need.

•   Take steps to build your credit. If your account was closed due to delinquency, you can focus for a few months on making on-time payments or taking other steps to build your score. Then, you could try again to reopen your card or simply apply for a different one.

•   Apply for easier-to-get funding sources. If you need funding, you can also consider applying for a secured credit card, which is backed by a security deposit that serves as collateral. Secured credit cards tend to be easier to qualify for due to the deposit you’ll make.

Using Your New Credit Card Responsibly

Whether you’re reopening a closed credit card or applying for a new one, using a credit card responsibly is critical. By doing so, you can work to remain in good standing with your credit card issuer and build your score over time. Here are some tips for responsible credit card usage:

•   Don’t spend more than you can afford to pay off each month.

•   Always try to pay off your balance in full to avoid incurring interest charges.

•   Make sure to submit payments on-time (setting up automatic payments can help).

•   Regularly review your credit card statements and credit report to check for any errors or indications of fraudulent activity.

Recommended: When Are Credit Card Payments Due?

The Takeaway

Reopening a credit card can be as simple as contacting your issuer. However, whether or not you’ll get your request fulfilled will typically depend on the reason your account was closed and how long it’s been since you last used the card.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Can you reopen a closed credit card due to inactivity?

You may be able to reopen a credit card closed because of inactivity. However, whether you can do so will ultimately depend on your credit card issuer and their policies on reopening credit cards.

Can you reopen a closed credit card due to nonpayment?

In most cases, you probably won’t be permitted to reopen a card that got closed due to nonpayment. You may be able to if you can demonstrate to your credit card issuer that you’ve paid back the balance due and can be responsible with payments.

Will I get back my rewards if I reopen a closed credit card?

You most likely won’t be able to get your rewards back. Still, it doesn’t hurt to ask your credit card issuer just to make sure.

Do all credit card issuers allow you to reopen closed credit card accounts?

Many credit card issuers won’t allow account reopening, though some do. To find out if yours does, you’ll need to contact them directly.

Photo credit: iStock/insta_photos

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Federal student loans come from the government and offer perks like fixed interest rates and income-driven repayment plans, all set by law. Personal loans are issued by banks and other financial institutions with terms set by the lender, typically making them more expensive.

When it comes to paying for college, starting with federal loans is usually the most cost-effective option. However, if your federal loans aren’t enough, you still have options, from private student loans to scholarships and grants. While personal loans are a great resource for many large purchases, college tuition is not one of them.

Read on to understand the key differences between federal student loans and personal loans, including how they work and the purposes they’re best suited for.

What Are Student Loans?

A federal student loan is government-provided financial aid that covers educational expenses and requires repayment with interest. To apply, you must complete the FAFSA annually to assess your financial need. There is no credit check required for federal student loans.

Some federal student loans provide flexible repayment options, such as income-driven repayment plans that adjust payments according to post-college earnings, and forgiveness programs tied to specific occupations. Borrowers are free to modify their repayment plan after obtaining the loan.

There are several different federal student loan options, including:

•   Federal Direct Subsidized Loans: These loans are for undergraduates in need of financial assistance. The amount depends on college costs and family income, as determined by the FAFSA. The government usually covers interest while you’re in school.

•   Federal Direct Unsubsidized Loans: These are for undergraduates and graduate students. The amount you receive is determined by the cost of attending your school and not your financial need. Interest starts accruing immediately, and you can choose to pay it while in school or add it to your total repayment.

•   Parent PLUS Loans (Direct Parent Loans for Undergraduate Students): Allow parents to borrow on behalf of their undergraduate children. You must complete a separate application from other federal loans to qualify for these.

•   Grad PLUS Loans: Allow graduate and professional students to borrow money for education expenses.

What Are Personal Loans?

Personal loans are offered by banks and other individual lenders and can be used for just about anything. Common purposes include consolidating high-interest debt, home improvement, moving, family planning (think IVF or adoption costs), and major car repairs. Generally, a personal loan cannot be used for a down payment on a home, business expenses, investing, or college expenses. That’s right: Most lenders don’t allow borrowers to use personal loans to pay tuition and fees, or to pay down student loans. If you need funding for college outside of federal loans, it’s best to look into private student loans.

Personal loan lenders may offer variable or fixed interest rates, along with repayment periods typically ranging from one to seven years. To qualify for a personal loan, lenders review your financial history and credit score. It’s important to note that each lender has different terms and conditions, so it’s essential to understand the annual percentage rate (APR) and repayment terms before committing to a specific offer.

Student Loans vs Personal Loans: Key Differences

Purpose aside, here’s a breakdown of the key differences between student loans and personal loans.

Interest Rates

In general, federal student loans have fixed interest rates, meaning your rate remains the same throughout the entire loan term. For example, the average rate for Direct Subsidized and Unsubsidized Loans for undergraduates for the 2024-25 school year is 6.53%.

On the other hand, personal loans can have variable or fixed rates, and are often higher than federal student loan rates. Depending on the borrower’s creditworthiness, repayment term, principal amount, and the lender, personal loan rates vary widely, ranging from 7% to 36%.

Loan Forgiveness

With federal student loans, you may qualify for additional benefits, such as Public Service Loan Forgiveness (PSLF) and Teacher Loan Forgiveness (TLF). These programs can forgive your loan balance after a specific period or upon meeting certain criteria.

Personal loans, however, do not offer any loan forgiveness programs. Nonetheless, lenders may provide options to prevent default if you encounter difficulty making payments due to hardship.

Repayment Terms

Federal student loans provide several repayment plans ranging from 10 to 25 years, including options that allow you to lower your payments based on your income. Repayment can also be deferred while you’re enrolled at least half-time and immediately after graduation.

Personal loan lenders also offer different repayment terms, typically between five and 20 years, giving you the power to choose what works best for you.

Credit Requirements

Federal student loans are part of an overall financial aid package offered to students. To apply for these loans, you’ll need to fill out the FAFSA each year, typically between October and July. Federal loan approval is often based on financial need, and no credit check is required.

When applying for a personal loan, you’ll complete an application and undergo a credit check. Each lender sets its own criteria for approval, often requiring a credit score of at least 670. If you don’t meet the credit requirements independently, many private lenders allow you to apply with a cosigner. Having a cosigner with a strong credit history can improve your chances of approval.

Deferment and Forbearance Options

If you’re dealing with a short-term financial challenge, you might qualify for a deferment or forbearance on your federal student loans. During deferment, you can pause your payments temporarily. It’s important to note that subsidized loans won’t accrue interest, but unsubsidized loans will. This means any unpaid interest adds to your loan balance, increasing your debt. For forbearance, if you can’t make payments, interest continues to build on your loan balance.

Personal loans may also offer deferment and forbearance options, but each lender has different rules. Before taking out a personal loan, it’s important to understand these options in case you face financial difficulties.

When to Choose Student Loans

It’s a trick question to compare personal loans vs student loans for college expenses, since student loans are the only option. But even if personal loans were an alternative for college expenses, federal student loans make more sense due to their typically lower interest rate and additional borrower protections.

Those protections include income-driven repayment plans, loan forgiveness programs, and deferral and forbearance options, which can be really helpful if you hit a rough patch financially.

When to Choose Personal Loans

Personal loans are a good option if you have a major purchase coming up and want to avoid putting it on a high-interest credit card. Just be sure to compare personal loan options carefully to avoid piling up debt. To find the right loan and repayment choice, look for the one with the lowest overall cost by considering the loan amount, interest rate, term, and fees.

The Takeaway

When deciding between federal student loans vs. personal loans for funding college, personal loans are simply off the table due to lender restrictions. This shouldn’t pose a problem, though, because federal student loans offer a better deal for college students anyway, with fixed interest rates, income-based repayment plans, and forgiveness options. In the event that federal student loans don’t cover your total cost of attendance, consider a private student loan to bridge the gap.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

Can I use both student and personal loans?

Most lenders don’t allow personal loans to be used for college expenses. However, if federal student loans don’t cover your full cost of attendance, you can apply for a private student loan to bridge the gap.

Do personal loans have borrowing limits for college?

Trick question! Personal loans can be used for just about anything, from home improvement to moving costs. However, there are a few exclusions, and college costs are one of them. Fortunately, private student loans exist for just that purpose, with borrowing limits up to your cost of attendance.

Are personal loan interest rates higher than student loans?

Personal loan interest rates are usually higher than federal student loan rates and private student loan rates.

Photo credit: iStock/Drazen Zigic

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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Figuring out how to live on one income, either by design or circumstance, can seem daunting. And it may put a lot of financial pressure on that one wage earner.

That said, plenty of American households live on a single income. According to the latest government statistics, only one spouse was employed in around a third of families with children and nearly one quarter of married couples without children. There’s strength in those numbers, proving that it can be done.

If you are learning how to live off one income, read on for 12 smart strategies that will help you make the most of your money and live well, including:

•   Making a realistic budget

•   Reducing food expenses but still eating well

•   Downsizing your home

•   Earning extra income

•   Focusing on what you have

Is It Possible to Live on One Income (After Living on Two?)

It’s certainly possible to live on one income, even after being accustomed to two. Maybe you or your spouse is now a stay-at-home parent or caring for an elderly relative, or one of you lost your job. Whatever the reason, going from a dual income to a single income household will likely take some careful planning and adjustments. For example, you may need to sit down and go through all of your household expenses, then make some adjustments — perhaps even consider downsizing your lifestyle. Adaptability and a proactive approach are key to successfully making this transition.

12 Tips for Living on a Single Income

How to make it on one income? Consider starting with a newly streamlined (but livable) budget and moving on to other changes one by one.

1. Making a Budget

First step, reality check. To successfully live off one income, you’ll want to document your household’s take-home pay. It’s also a good idea to take stock of the kinds of income you could count among your assets, such as money you might earn from a side hustle or dividends from any stocks you might own.

Then, tally all expenses that are musts, such as:

•   Mortgage or rent

•   Groceries (even that annual Costo membership fee)

•   Health insurance costs

•   Transportation, such as car payments, gas, insurance, and repairs

•   Utilities

•   Child care

•   Work-related expenses (commuting, clothing, etc.)

Discretionary income is what is left after your “fixed” or “necessary expenses” are covered. This would be money to use on a weekend brunch with friends, taking the kids to the theme park, or other moderate splurges. But you don’t necessarily want to spend all of that money; you also want to allocate some towards paying down debt and saving towards other financial goals, such as an emergency fund or retirement. For savings you may need in the next few months or years, consider opening a high-yield savings account, then setting up an automatic recurring transfer from checking into this account on the same day each month.

To streamline the budget-making process, you may want to use an online tool (many banks provide them) or try an app that helps with this process. If you’re raising kids on your own with one paycheck, it can be especially important to learn how to budget as a single parent.

2. Freezing Extra Food

This can save a lot of money and consolidate your food prep time, too. Consider taking a few hours a week to cook foods that freeze and reheat well, such as lasagna, chili, soup, or pot pie. You might also bake and stash muffins and bread for weekday or game-day breakfasts. The homemade food you prepare is likely to be more wholesome (no preservatives) and less expensive than store-bought.

To make freezing a breeze, make sure you have some containers and foil wrap on hand; then use masking tape or stickers to mark and date contents and reheating instructions.

3. Transitioning to One Car

Becoming a one-car household is not only better for your budget (gas, insurance, new tires, car repairs) but it helps the planet, too. Perhaps your partner can take public transportation to work and leave the car home for grocery runs, doctor appointments, and shuttling kids.

If one of you has to drive to work and thereby leaves the other without wheels, drill down on clear communication and scheduling. For instance, you need the car back by 6 p.m. to make a meeting. Otherwise, you might take public transportation or call the occasional Uber to get places. Carpools can also work for kids’ activities and work commutes.

If you’re a newly single parent balancing car costs along with everything else, you’ll want to create a reasonable post divorce budget to guide you. Transportation is often vital but can often be obtained at a reasonable price.

4. Monitoring Utilities and Electricity

Saving money on utilities is increasingly easy with tools like smart thermostats. A good rule of thumb is to lower your thermostat when the family is out (say, during school hours) and at night when everyone is under blankets in winter. In summer, consider keeping the house warmer if you’re at work; no need to cool an empty house.

It’s also wise to keep up with maintenance appointments for your home’s heating and cooling systems; just like a car, it needs tune-ups to run best. Teach the whole family to switch off lights and T.V. when they leave a room. Target “phantom” energy use, which is the energy appliances (especially electronics) use when “sleeping” but still plugged in. These dollars add up.

5. Downsizing Your Home

If you’re living on one income and housing costs are eating up a big chunk of your budget (which is common in today’s housing market), you might want to consider moving to a smaller house, apartment, or condo. You’ll be on trend with the tiny-house movement and the shift toward minimalist living.

When you shrink your footprint, you generally save money on property taxes, utilities, electricity, and lawn and snow care. In most cases (depending on location), the smaller the space, the lower the bills. All of this can feel freeing.

Another way to downsize (though not literally) can be to move to a home with fewer amenities or one that’s in a neighborhood a bit farther away from downtown. You may be able to get the same square footage for less.

Recommended: What’s Net Worth vs. Income?

6. Doing Meal Planning and Buying Groceries on Sale

Even on a budget, you can eat well — even better than grabbing unhealthy, overpriced takeout. Consider planning meals around what’s in your pantry and what’s on sale each week. It can be fun to explore the budget-priced recipes online; plenty of sites have “meals under $10” and similar categories to help provide inspiration.

You might enjoy scheduling meals by day of the week (Meatless Monday, Taco Tuesday, and Sunday Roast Chicken are a few examples), and shop based on what’s in season and on sale. Summer tomatoes (maybe from your garden) yield gazpacho or homemade spaghetti sauce. Winter vegetables like carrots are perfect for roasting and or adding to soups.

Recommended: 23 Tips to Help Save Money on Groceries

7. Paying Off High-Interest Debt

High-interest debt, the kind you accumulate on credit cards, can have steep annual percentage rates (APRs). The currently average APR on credit cards is 27.62%. If you carry a balance, that means everything you buy with plastic is costing you significantly more than what the receipt says because you take on that hefty APR.

If you’re dogged by this kind of debt, you’ll want to work whittling it down. You might also consider consolidating your debt with a lower-interest personal loan or making the switch to a balance transfer card that offers no or low interest for a period of time.

Recommended: How Does APR on Credit Cards Work?

8. Getting a Roommate

Sharing housing expenses by renting out a spare room can immediately free up funds in your budget. This option actually comes with more than one advantage. Many people get a budget boost by sharing the costs of rent, laundry detergent, coffee, utilities, and the cable bill. And you may also like having an additional member of the household with whom you can chat and bond.

9. Using Credit Cards Responsibly

The old rule still holds: Don’t use credit, generally not even for gas or food, unless you can pay off the balance every month. If not, you will incur interest that will build and build.

Before making a big, unplanned purchase, you might try the wait-and-see method, which means walking away for anywhere from 48 hours to 30 days (it’s your choice), and then seeing if, after some time has elapsed, you still feel you have to have it. In many cases, the desire has faded.

Still having trouble with debt? Consider working with a non-profit like the National Foundation for Credit Counseling (NFCC ).

10. Earning Extra Income

Another angle on being a single-income household is to see how you might bring in more money. It’s not just side hustles (moonlighting as a writer or web designer, for instance) or cleaning offices at night after your full-time job at school.

Consider new ideas for how to create your own passive income, from rental properties to advertising on your car.

Recommended: Ways to Create Residual Income

11. Finding a Travel Buddy

When budgeting for single-income life, you don’t have to give up vacations indefinitely. Instead, find ways to save money on travel. Whether you’re visiting the West Coast or the Mediterranean, sharing a hotel room or Airbnb with a friend can bring big savings.

A travel buddy can also chip in for the rental car, gas, tolls, park entrance fees, and taxi/Uber costs. Or you could consider camping with a friend or family member; that’s another great way to enjoy an inexpensive getaway.

12. Focusing on What You Have

As you trim expenses and get into your groove as a one-paycheck household, don’t lose sight of the gifts you have, riches that can supersede a second income. That includes more family time, good health, companionship, a roof over your head, heat, food in the freezer, a car that runs. Remember, wealth comes in many forms.

One last tip: If luxury-focused social media accounts are making you feel as if you’re missing out on the good life, unfollow them! Most are unrealistic representations that fail to reflect real life.

The Takeaway

Learning how to live on one income after having two may take practice and require some smart budgeting hacks, but it can often be done without major deprivation. By experimenting with a variety of strategies, you’ll find the ones that work best for you, financially and personally. You’ll also likely feel a surge of pride when you hit on the right combination of moves that lessen any money stress and enhance your financial well-being.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

How do you budget for a single income?

To budget for a single income, start with the take-home earnings you will live on and subtract essential expenses, such as a roof over your head, food, debt, and health insurance. Then look at wrangling your negotiable costs, such as owning one car vs. two or how much you budget for meals, to make ends meet. An online budgeting tool or consumer finance app can help.

How many families live off of one income?

According to the latest government statistics, only one spouse is employed in 33% of families with children and 23.5% of married couples without children.

What is the average income for a single person in the U.S.?

The average U.S. annual salary in Q4 of 2023 was $59,384, according to government data.

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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

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