8 Ways We Financially Thrive On $35,000 a Year With a Family!

The Social Security Administration states the average American salary is $50,321.89. If you’re like me, your annual household income is below this mark. Even as a married person with two children, we are able to thrive on $35,000 a year without living paycheck to paycheck.

It’s no secret that living on $35,000 a year isn’t easy. However, it can be done. You must be intentional with how you spend and save each dollar.

Today, I’m going to show how we don’t live paycheck to paycheck, take a vacation, and save for the future on a modest income.

Update August 2019: I originally wrote this article in September 2017 when our taxable household income was $35,000. Two years later, we now make closer to $45,000 as our business is more established. We earn a variable monthly income and still live as if we earn $35,000 a year by practicing the advice below. 

1. Have a Positive Attitude

Like anything in life, you need a positive attitude. A simple change in attitude makes it easier to conquer debt and appreciate the little things.

This advice sounds cliche, but it’s true. If you need help maintaining a positive attitude, speak with your spouse, deepen your faith, listen to positive music or podcasts, and avoid negative-sounding content (like the evening news or talk radio) as much as possible.

I’ve spent my post-college years on both ends of the income spectrum making between $20,000 and $80,000 a year. I’m now in the middle of that range and probably will be for the foreseeable future.

Having $2,000 of free cash each month (when I made $80k a year) was a huge blessing for getting out of debt and saving for a house down payment. Although the 70-80 hour work weeks weren’t worth the financial peace of mind.

However, my wife and I didn’t need to earn $80,000 to pay the bills.  I was scared to quit because I didn’t think we could live on a small income. After taking a somewhat unexpected $60,000 pay cut in 2015, we found out we could live on $35,000 a year. That’s because the money management tools we used while making a large income prepared us for earning less.

2. Cut Monthly Expenses

The instant way for us to have more money each month was by spending less money.

We reduced our spending in these ways:

  • Cancel subscriptions (i.e. Netflix, SiriusXM, cable tv, and less phone data)
  • Compare auto and homeowner’s insurance prices (You can also raise your deductible)
  • Switch to a prepaid cell phone carrier (We use Cricket, but you might like Tello)

An effortless way to cancel subscriptions or lower your utility or subscription bills is using a digital assistant. Two of the best are Trim and TrueBill. If they can lower your bill, they keep a small “success fee.” Hey, you don’t have to call the phone or cable company and threaten to cancel your service or beg for a break. They do the dirty work for you.

  • Trim: Cancel or monitor subscriptions with a text message, Facebook Messenger, or online website
  • Truebill: Mobile app (and computer website) for Apple and Android devices.

If you like mobile apps, use Truebill. Otherwise, try Trim to avoid another download. Either one makes sure you pay the lowest price on your recurring bills.

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3. Avoid Debt Like It’s a Plague

What do monthly payments and vacuums have in common? They both suck.

If you don’t borrow money and go into debt, you instantly need less money to live on.

For instance, not applying for a loan with a $500 monthly payment is an extra $6,000 in your bank account every year. You can use that cash to pay off current debt, invest more, or build up your rainy-day fund.

Becoming debt-free in 2018 is one way we were able to accumulate enough money to buy a rental property. We do have a small loan on that property. But we wouldn’t have this investment if we still had our own home loan and car loan to pay. Now, the tenants make our monthly loan payment.

Need Help Making a Plan to Get Out of Debt?

If you need help planning how to get out of debt, I recommend the Pay Off Debt App. My friend, Jackie, built this app to let easily see how much you need to pay each month to get out of debt. Simply list your loan amounts and the app calculates the quickest pay off strategy.

4. Don’t Drive a Fancy Car

2012 Mustang GT

My one “splurge” as a single person was buying a new 2012 Ford Mustang GT. I sold my dream car because the cash was more valuable than an eye-popping ride that depreciated in value monthly. It was an emotionally tough decision since that car was so fun to drive and because I no longer had a car payment.

Instead of driving a $20,000 car Mustang GT (V8 with leather interior), I got a $2,000 Mustang V6. It’s like comparing apples to oranges, I know. I still reliably get to work with an older car and the extra cash was split between rebuilding our savings and loan payments.

Pay Cash for Vehicles

We own two vehicles and the total combined value of both is around $10,000. We now save up cash so we can avoid car loans for our replacement vehicles.

For some people, a new or almost-new car can make sense if you travel often or can keep it for a decade. Otherwise, you are better off letting the first owner pay full price sell to you after the car has depreciated in value thousands of dollars.

When you’re living on a modest income, it’s also harder to justify buying a $40,000 to $60,000 SUV or truck to cart the family around in as well. In our case, buying a used yet reliable family car was our only option.

5. Cook Your Own Meals

Our monthly grocery budget now is around $400 ($4,800 annually) for our family.

Cooking your own meals is another easy way to spend less money. Even if you go to the grocery store freezer section, it’s still cheaper than going to a restaurant. I personally enjoy the freshness and taste of home-cooked meals more. We even eat organic food which we buy at a discount through local merchants and shopping online.

Need help grocery shopping? Avoid these 5 grocery store mistakes

With my old job, I bought two meals a day and would spend $20-$30 daily. Conservatively, I spent $5,000 a year on meals, Starbucks, and gas station snacks. And that was just for me.

Ditching my poor eating habits and exercise also helped me lose 20 pounds.

You can start cooking at home with $5 Meal Plans. As you might guess, you can make an entire meal to feed a family for $5.

6. Shop Thrifty

My wife and I also do everything possible to buy everything either secondhand or on clearance.  That includes our clothes, gadgets, and must-haves.

Here are just a few ways we save:

  • Always check Craigslist, Facebook Marketplace, eBay first
  • Shop Online with Rakuten (get cash back on every purchase)–Read my Rakuten review to learn more.
  • Check local thrift stores or consignment sales for used, name brand clothing
  • Shop in bulk (only for products we will use and not throw away)
  • Wait at least 24 hours before making a large, impulse purchase

In addition to avoiding debt like it’s a plague, we limit our shopping trips. Having two small children makes that easy for brick-and-mortar visits. Although the temptation still lingers for online shopping.

Making a list of items we want (and sticking to it) to compare prices and wait for deals is what works best for us. Planning ahead gives us the freedom to wait for great deals so we don’t have to pay full price because we wait until the last minute to buy.

I also highly recommend using a cashback portal to get money back on most online purchases.

7. Geoarbitrage–Live in a Low-Tax State

Geoarbitrage is another way anybody can thrive on $35,000 or less. I realize not everybody can just pick up and move. If you have “California cost-of-living,” you need to earn the California-equivalent of $35,000. That’s why so many people are moving away from expensive cities and relocating to cheaper areas.

The high cost-of-living for my intended career and a mountain of student loan debt is why I pursued a different path.

Even if you can’t change cities, consider changing apartment complexes or neighborhoods. Never compromise your safety just to save a few dollars in rent. Living in a neighborhood without HOA fees or an apartment complex without a swimming pool can save you a small fortune.

8. Pursue a Side Hustle

Spending less money is only one way to live happy on $35,000 a year. I also recommend getting a side hustle. Sometimes, making more money is easier than cutting expenses. After all, you or I won’t willingly move into a cardboard box or ditch our health insurance to become minimalist.

If you have free time, put it to good use and make extra money. My side hustle (freelance writing) is now my primary income stream. You never know what will happen. Be patient and try new things to find out.

You Too Can Live on $35,000

Avoiding debt and knowing how you spend your money on a daily basis is essential to living on $35,000. Making less than the median national or regional income doesn’t mean you will live paycheck to paycheck. Plenty of “wealthy” people struggle to pay the bills because they chase a high social status.

It is easier to save for retirement, pay off debts, and take exotic vacations with a high income. But a little planning and a positive mindset make it easy to live on a smaller income. Speaking from personal experience, I have no regrets giving up my large salary because we know how to thrive on our smaller income.

Related Articles:

  • How to Prepare for the Next Recession
  • 7 Money Traps of the Struggling Middle Class
  • 6 Advantages of Being Debt-Free
  • Why I Don’t Watch TV


$35,000 a year is how much an hour?

Your annual salary is $35,000 a year when you make the following hourly wage each week:

  • 40 hours a week: $25
  • 50 hours a week: $13.46
  • 60 hours a week: $10.86

Can you live on a small income?

Yes but it’s not always easy. You will need to keep your expenses as low as possible. One of the best ways is planning family meals instead of going out to eat. Also, ditch cable tv and use a pair of rabbit ear antennas for local channels and get a streaming app to watch on-demand videos.

That’s what I’ve done since 2008. It was an adjustment at first, but you will save money and discover new interests that don’t involve watching tv.

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$35,000 a year

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