How to live on $2500 per month

Live on $2500 per month

Can you live on $2500 per month?

I am going to get real with you–show you some real numbers from our real budget and how we lived on $2500 per month with kids! 

If you don’t have time to analyze this now, make sure to pin it for later!

In July of 2015 we were just starting the journey to pay off Mr Dentist’s student loans. We had two little boys and I was pregnant with baby #3. We had just accepted his first real job as a dentist and finally had some money coming in.

BUT we also had a mountain of student loans to work on flattening, and I was not about to let them stick around any longer than was strictly necessary. So we created our budget and got to work.

And this is the budget that I am going to share with you today. (In truth, it hasn’t changed a whole lot since paying off our loans either). 

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Why do I share these real numbers with you? Because I want you to see that it is possible to live on one income, with a family, and still make it. 

Now, I know not everyone’s circumstances will be the same. Some places the housing cost will be more, some will be less. Other places are more expensive to live overall. We lived in a fairly low cost area. 

But I want you to see that if you are determined, it is possible and doable. Being intentional with your money, as Dave Ramsey always says, is the way to win with money.

I won’t be sharing our actual annual income–so much of it went to paying down student loans that it didn’t help our living situation at all.

I am sharing with you what we lived on after debt payments and paying tithing to our church. SO, here we go!

If you are determined, anything is possible.

Mortgage: $1168 per month

Now, just before we started paying down loans, we bought a house. I know, I know. Don’t throw rocks at me.

We had some money that was specifically ear-marked for a house and it was cheaper to buy than pay rent in this town. So that is what we did.

We probably could have gotten a smaller, less expensive house. But we loved the house we had. Some will see this mortgage as cheap (I did!) and some will say “wow! That’s a lot!”

And, when you are only living on $2500 per month, that is a HUGE chunk of your money.

Food/Groceries: $350

Yep, you read that right. We had a small food budget for 4-5 people during this whole process. How did we do that?

Meal Planning was HUGE in keeping our food budget down, and planning meals that are frugal and inexpensive in nature. We shopped at Wal-Mart almost exclusively and worked to waste as little food as possible.

Utilities: $200

This includes water, sewer, garbage, electricity, and natural gas. We put our utilities on the “budget plan”–which I highly recommend you do when trying to figure out your finances.

Basically the utility company averages how much you have used in the last 12 months on utilities and then finds the price for that average, and that is your monthly bill amount.

This keeps your bill the same amount from month to month so that you know exactly how much your bill will be–no surprises.

Phones: $90

We were on a family plan with my in-laws and so got both of our phones for just $90 a month. The phone plans had limited data, but we just adjusted our usage so we didn’t go over.

It IS possible to have a small phone bill. Phones should not be a big part of your budget. 

Internet: $52

We did a basic internet plan–nothing fancy, no extra bells and whistles. But it allowed us to have internet, stream a few devices, etc. Just what we needed. So we were able to keep the price down.

Again, when you are living frugal and paying off debt, simple is better.

Car Insurance: $114

This is the cost of our insurance for 2 vehciles AND life insurance on both my husband and I.

We have been with our insurance company sicne we got married. So we have some good driver discounts, longer term customer discounts, bundling discounts, etc.

If your insurance is high, shop around or ask about ways to lower it.

RELATED ARTICLE: Save $1000 Fast

Gas: $120

We lived in a small town. My husband’s commute to work was all of 5 minutes. So the amount of money we spent on gas in our cars was small.

I know lots of you will need to beef up this number in your budget. But it worked for us during this time.

Are you ready to get control of your budget?

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Fun: $75

I am a firm believer that you need to budget money for some fun. As you can see, it wasn’t a large amount. But it did give us the freedom to do some fun things as a couple and/or as a family.

Life is more than working and paying off debt. There needs to be room for at least SOME fun.

Free Spend: $50

Similar to the “fun” category, we also allowed ourselves $25 each, every month, to spend as we wanted.

This again helped us to stay on budget, when we knew we had some money we could just spend as we pleased.

Incidentals: $100

This might be the most important budget category. It is the “catch all” category. Is your friend having a baby shower you didn’t know about? This budget item will allow for that extra expense.

Kids need some new shoes or jeans? Same thing! Having this built-in budget allows you to stay on budget when unexpected expenses come up–because they will.

And if you don’t use all of it in one month, you can save the excess or put it towards debt.

Pre-School: $60

Yes, I know this preschool budget is crazy low. My son participated in a Co-Op preschool. So to help off-set the cost of the school, the parents had to provide snacks, supplies, and come into the classroom and help. So what we did not pay for with money, we paid for with time. 

Budget Total: $2379

There you have it. That is what we lived on $2500 per month while paying off those pesky dental school loans.

We did have a separate emergency fund, which we funded before getting this started.  

Health Insurance: My husband’s work offered a group employer plan, and the portion we paid came out of his paycheck before it was paid to us. That is why health insurance is not included in this list. 

Final thoughts about how to live on $2500 per month

So you see, living on $2500 per month, or less, even when you have kids in the house, is totally possible.

If we had needed to pair down our budget even more, we would have looked into a cheaper housing option, maybe ditched the paid for preschool and done all home based pre-school. 

I don’t share this to say it is the only way, or the best way, to budget your finances. I am just showing you an example of what we did, and what worked for us. 

Everyone’s circumstances are different, and different areas of the country cost more, or less, than ours did. I just want to show you an example of what is possible and hope you can take some ideas to include in your own financial journey.

Let me know if you have questions, or what you think about our budget.

How to live on $2500 per month

Are you ready to get control of your budget?

Start your family budget easily, the right way! This free printable budget planner will help you get started!

how to live on $2500 per month
how a family of 5 can live on 2500 per month

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