How I Live on Less Than $40,000 Annually: Fawn from Illinois

As a visiting nurse, Fawn treats her family finances with the same level of meticulous care and attention that she gives to her patients.

My name is Fawn. I’m a 54-year-old nurse who is a single parent to four children — a son who is grown and married, a daughter who is away at college, and two teenage boys who are still eating at home.

I’ve always been responsible with money, but I don’t try to accumulate it.

I also like helping others. After I graduated from nursing school, I established an annual $1000 scholarship that was funded for ten years.

The only debt I’ve ever had has been:

  1. School loans, but never more than $10,000.
  2. The mortgage, but with payments that were never more than 25% of my net income.
  3. Car payments.
  4. Rare credit card debt — although my credit cards are usually paid off in full every month.

While I make about $45,000 per year, after subtracting $9000 to cover my daughter’s college tuition, my household income is $36,000.

Household Expenses

I originally borrowed $88,000 to pay for my 3-bed/2-bath home that is 1750 square feet (excluding the unfinished basement). Since then, I’ve refinanced the original mortgage into a 15-year loan at 3%; the monthly payment is $602 and I have $47,500 remaining on loan. My other home expenses include $2400 per year for property taxes and $1100 annually for insurance. My utilities average $313 per month, but that includes $100 per month for the cell phone bills and I’m reducing this as our contracts expire.

My total food costs over the past few years, including school lunches, alcohol (for the adult only, of course!) and meals out, have averaged $458 per month.

I drive a 2010 Honda Insight, which I bought new. It’s paid for and I use it for work, so I get reimbursed for about 50% of the miles that I drive. My annual out-of-pocket vehicle costs come to about $4250, which includes a gasoline bill that averages about $168 per month, and maintenance costs of about $85 per month — the remaining balance pays for auto insurance.

Under other circumstances, I’d be willing to buy a used car but, as a visiting nurse, I drive everywhere for my job — including bad parts of town and the most rural areas, oftentimes during the middle of the night. For me, it’s a personal safety issue. I like the security of knowing that I have a reliable vehicle that I can drive for at least 300,000 miles.

Although I fund just one vehicle, my teenagers purchased a car from their father for $1, but they’re responsible for paying all of the gasoline, maintenance and insurance expenses.

Household expenses like toilet paper, shampoo and printer ink run me $700 per year.

School and activity fees are more than $400 per month, but this is my main luxury expense. The fees pay for my kids’ music lessons and other expenses including track and cross country, Scholastic bowl, band, Latin club, and the speech team.

Interestingly, I spend only $76 per month on clothing for the kids. I do most of my clothes shopping at Target or TJ Maxx, but I get a few items, like suit coats and prom dresses, at Goodwill.

I waste, er, spend $70 per month on food, litter and vet fees for my cats, which I have for the benefit of the kids.

I typically spend about $2100 on vacations, usually to visit my kids that live out of town. I also spend about $500 per year on Christmas.

The remaining $2000 is spent on my own clothing, work expenses, lattes and birthday gifts.


My entertainment is centered around my teenagers. For a decade I attended free baseball and basketball games. My family is also really into music, which means I get to enjoy their free performances weekly: There’s a local improv troupe that practices in my living room and a “garage band” that practices in my basement. I also watch my kids’ school marching band performances in the fall, and their jazz concerts in the spring. At one point when I counted all of the instruments in my home there were 12! Currently, there’s a clarinet, an alto sax, a baritone sax, a drum set, bells, an electric bass, an electric guitar, and a keyboard in my home.

My teenagers also routinely take me places I would have never considered. For example, I got to say “Hi” to a rock star (Styx drummer Todd Sucherman) after paying $10 for my son to attend his workshop.

And if all that isn’t enough, I get books and movies from the library for free!

I don’t have cable, or even a television; and while I had free Netflix for awhile, my real life is much better and more entertaining than any of those shows anyway.

My Investing and Savings Accounts

I save 10% of my gross income for retirement, and I have a 3% employer match. I have term life insurance through my employer for about $13 per month that would pay out 1.5 times my salary.

I have pretty good health insurance through my employer as long as I use the local hospital. I like to jokingly remind my daughter at University that if she wants to play rugby, she’s not allowed to get hurt because she’s not in-network.

My emergency fund has $3000 in it; that covers a month’s worth of expenses. At one point it held $10,000, but I’ve dipped into it to pay the tuition for my beloved daughter.

Closing Tips and Thoughts

I have lots of tips, which I post on my blog. Here are just a few of them:

  • Track every cent.
  • Cook from scratch; you’ll maximize your nutrition for the money you spend.
  • Know where your joys are and spend money there. For me, this is my kid’s activities. I don’t buy them fancy clothes or cell phones, but I allocate a significant portion of my budget for music lessons, music instruments, and extracurricular fees. This has resulted in fun for all of us and even scholarship money to help pay for college.

Some people may think that raising a family on $40,000 per year is a challenge — but if you ask me, it’s really a piece of cake. :)


If you’re a household CEO who is successfully making ends meet on roughly $40,000 per year or less, I’d love to hear from you. Contact me at and be sure to put “$40,000” in the subject line. If I publish your story, you’ll get a $25 gift card!

Photo Credit: Fawn


  1. 1

    Pepper says

    I am really thinking hard about cutting off my cable too, but everytime I get close to pulling the plug I chicken out! You’ve inspired me though. I think I am going to finally drop it… at least for a trial run. Thank you for sharing your story!

  2. 2

    Renee B says

    Inspiring story, but somehow the numbers don’t add up for me, so I may be missing a piece of the puzzle. I’m not sure how you can net $2635 per month for expenses if you have health insurance, 10% retirement, and taxes taken out of your check and only making $45,000 per year?? Not to mention the additional $9,000 outlay for your daughter’s tuition?

    • 3

      Len Penzo says

      It’s a fair question, Renee. In some cases, the numbers Fawn shared with me were multi-year averages, so there can be room for fluctuation. As for her health insurance, she works for a hospital, so I assumed those expenses are minimal, if not included as part of her compensation — but maybe Fawn can clarify that for us.

  3. 5

    Fawn says

    Yes, the numbers are not pure as the expenses were averaged over 4 years and things have changed form year to year. The $45,000 is net, my health insurance, life insurance, 401K are taken out before that amount. I get $6,000 per year for the three kids in child support, which goes into an account to help pay for college. For the next four years, I will have two kids in college at $9,000-$10,000 each kid, each year.

  4. 6

    Frugal Pediatrician says

    That is really amazing! I love how the kids have had such a rich experience with music and activities. Very admirable.

  5. 7


    I love reading this type of articles here and I can understand that living on less than $40,000 in the US is huge. I would personally love to earn at least $40,000 per year here in Romania, where I currently live well on around $15,000 – and many Romanians do live on a lot less. But seeing that it’s always possible to live a good life on what people consider “less than enough” is inspirational and pushes you to waste as little money as possible.

    • 8

      Len Penzo says

      C: I would love to share how you make things work with my readers. If you’re interested in sharing your story, let me know!

      • 9

        Spuky says

        Same thing in Mexico, living with 40k usd would be like living a dream for most of us

        Currently the wife and I earn(combined) more or less that, but we are going to try to live with only my salary(a little less than 14k usd) so wish us luck. We ran the numbers, I think we can make it work(and if we do, I’ll share an email with you Len)

  6. 12

    Fawn says

    @Jane Savers–I did before I started paying for the kid’s college. I have about $27,000 in an IRA index fund and $7,000 in a couple IRA CDs. But for the next 7.5 years, my focus will be paying for college.

    • 14

      Renee B says

      That’s what my calculations show as well. I could live on less than $40,000 too if I didn’t have to calculate health insurance, life insurance, and retirement savings and had child support on top of that. And someday I will be able to…but no matter how I slice it, it’s very difficult to do with two teenagers in order to provide for all their needs.

      • 15

        Shaboo says

        She nets $45000 but lets not miss the forrest for the trees!

        Lets assume her health insurance is $4000 per year, but I’ll bet its alot cheaper since her employer is a hospital.

        That brings her basic living expenses to about $3000 per month or $36000 a year. Not sure what she pays in taxes, and she’d have to probably sacrifice some of her kids fun expenses to boost her retirement, but other than that, I think she shows that everything she earns over about $40000 gross or maybe $45000 is gravy.

        • 16

          Paul says

          Run the numbers..she makes $60-70k per year, not $40 or $45k.The title of the post is “How I live on less than $40k per year”. She doesn’t.

          • 17

            Len Penzo says

            Paul, I can see your point. Your observation is a fair one.

            But … as Shabo notes, Fawn is clearly making ends meet on less than $40,000 per year. For sure, she wouldn’t be contributing as much into her retirement fund, but it’s clear she could make a few adjustments and make things work.

          • 18

            Fawn says

            I apologize that it has taken me so long to respond with numbers. I was out of town and then playing catch up for a couple days. I’m still not sure how you are getting such vastly different numbers than me. I did find two errors in the post (my fault, Len.) My auto insurance is $60 per month, not $101 and I get reimbursed for about 1/2 my miles because I drive for work. This is not considered income by me or the federal government, but it reduces those expenses noted above there by one half. So $84 for gas, $42.50 for repairs, $30 for insurance. So an average of $1878 for transportation per year.
            Also, yearly amounts: Mortgage-$7,224, Property taxes-$2,200, House insurance $1,092,Utilities-$3,756,Food-$5496,Life insurance-$149, Health & Dental-$2,765,401K-$4,500, Household-$700, Kid’s school and extracurricular expenses-$$4,800, Kid’s clothing-$912, Cats-$840, Vacation/trips-$2,100, My personal expenses-$2,000. When I add all that up, I get $40,912. Can you explain how you are getting $60-$70K?

          • 19

            Fawn says

            Also, those transportation costs do not include the purchase or depreciation on the car. Last car was purchased for $20,000. I tend to keep them about 9 years, so about $185/month for purchase of car every 9 years.

      • 20

        Fawn says

        I was out of town and not able to look up the exact numbers until today. Health and dental insurance for the family $115.23 twice a month or $2,765.52 per year. Term life for me and kiddos is $12.20 per month or $146.40 per year. I put 10 percent of my income into 401K, which varies paycheck to paycheck as I a an hourly employee.

        • 21

          Fawn says

          Oops, forgot, my federal taxes swing wildly from one year to the next as one of the children is my dependant for odd years and their father’s for even years. I don’t base my monthly budget on that.

  7. 22

    Fawn says

    Hmmm….Paul– If my income is $100,000 and I spend $20,000….by your definition…I’m living on how much? If I save 20 or 70% of my income, I’m living on how much?

    Even with child support, I do not gross $60-$70k per year. I certainly do not spend that amount.

    Is the question, “what is my total gross income?” Or is the question “what do we live on?” Two very different answers.

    • 23

      Paul says

      No sense in us arguing. The numbers are what they are. You have your opinion, and I have mine. Keep up the good work.

    • 24

      jeb says

      Two interesting points of view. I normally tell people my income is $40k since that includes insurance (at one job) and housing (from a different job) but it doesn’t include passive income from dividends, interest, real estate income, etc. I suppose if I defined “live on” as cash spent out from my pocket it’d be $7k per year.

      • 25

        Fawn says

        Wow! That’s really impressive. Where do you live? Would you consider being one of Len’s subjects? I think I could learn a thing or two from you.

  8. 27

    Fawn says

    I do have AC, but do not use it unless it is 95 degrees or so upstairs. I like the fresh air. The utilities is an average. In winter I can have a $200 plus heating bill, but many months natural gas is just for the water heater and stove, which is less than $20/month. I do not have a lot of electronics and vampire load. I do have one teenager that keeps leaving the light on in the basement.

  9. 28

    Kris says

    I would just like to point out that healthcare employees (RNs included) do not get the best, least expensive health care insurance, especially when it comes to add on dependents. This woman is still doing an amazing job – raising a family and living within a budget, and helping her children get enriched educations to move them forward in this world.

  10. 30

    Ashley says

    Just curious – are you interested in stories from readers that LIVE on 40k a year or less, or those that make *AND* live on under 40k a year?

    • 31

      Len Penzo says

      I prefer the latter, but in the grand scheme of things, Ashley, I’ll accept the former too because total income is irrelevant if you’re living on less than $40k annually. :-)

  11. 32

    Esther says

    I don’t know about how this holds true for many people. First, for me, or anyone living in a large metropolitan area would be hard pressed to find housing this cheap (los Angeles, New York), without living in a bad neighborhood. I’ve lived in them. Then, student loans. I haven’t seen private Healthcare for less than $250.00. I’m self employed, thus also pay a higher tax. Also, there are thresholds… Margins of live ability… Earning gross $36 is vastly different from grossing $45k.

    • 33

      Len Penzo says

      The important thing, Esther, is that it holds true for Rebecca. And that shows that it can be done!

      The moral of the story is this: How much we spend is a function of our choices in life. For example: Where we choose to live, what kind of car we drive (assuming we drive one at all), the number of kids we have (and more importantly, when we decide to have them), entertainment preferences, and our willingness to live below our means.

      As for private healthcare, prior to Obamacare, there was something called catastrophic insurance. For as little as $40 bucks per month, people could be covered for the cost of major medical expenses. It was perfect for a lot of folks — especially younger people. Sadly, those days are now gone.

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