Among the many challenges and responsibilities of being a single parent, money management is perhaps the most significant. Being the only provider means that you’re solely responsible for your and your kids’ financial situation, while your needs are almost equal to those of two-parent households.
However, a well-thought-out approach to planning your finances will allow you to manage your spendings, ensure your kids’ health and safety, and maybe even generate some extra income. If you’re looking for ways to take control of your expenses, you might find the content below useful.
In this article, we will share several practical budgeting tips for single parents, including determining your monthly budget, building an emergency fund, automating your finances, saving money for long-term goals, and finding fun yet free activities to try with your kids. Read on and ensure that a one-income budget won’t tie your hands!
Table of Contents
Make a Thorough Analysis of Your Monthly Expenses
Before you set up your budget, it’s necessary to analyze your expenses and income thoroughly. This will allow you to determine exactly how much money you can spend on various things and come up with a way to save some for emergencies.
First, you should list all the sources of your monthly income. This includes the take-home pay from your job, regular side earnings, welfare, and other forms of help, as well as any passive income that you may receive from investments. You should also keep in mind that if you receive a certain amount of money from your ex-partner in the form of child support or alimony payments, this should not be part of your monthly income, no matter if it’s according to a divorce certificate or not.
Then you have to list all your regular monthly expenses. These include rent/mortgage, utilities (internet, phone, gas, electricity), food, transportation costs (car loan payments, gas, maintenance), childcare/babysitting, insurance payments, health expenses (prescriptions, dental care, appointments), and any other necessary recurring expenditures.
Finally, consider the irregular expenses that may pop up from time to time. These include vacations (plane tickets, hotel charges), unexpected medical bills, out-of-the-ordinary supplies (baby formula, diapers, etc.), gifts for birthdays and holidays, and so on.
After this thorough analysis of your finances, you will be able to determine an approximate amount of money you can afford to spend every month. This number will become the basis for calculating your overall budget.
Create a Budget That Allows You to Save Money
Now, you have to come up with a budget that will allow you to spend the money you have determined for your expenses and still have some left for savings. To do so, you can create a budget based on the 50/30/20 rule.
According to this rule, you should allocate 50% of your income for necessities (such as rent, food, and gas), 30% for “wants” (such as vacations, entertainment, and clothes), and 20% for savings.
Of course, there’s no such thing as a universal rule regarding budgeting. First of all, it largely depends on how much you earn compared to the sum you spend on necessities. Then, you have to determine what is most important for you and your family. If you want to go on vacations, for example, but don’t want to save money for retirement or other long-term goals, you may want to spend less money on necessities, and more on your “wants.”
Build an Emergency Fund and Save for Long-Term Goals
No matter your budget goals, it’s a good idea to build an emergency fund. This is a stash of money that you can use when something unexpected happens, e.g., if you suddenly lose your job or fall ill and have to pay for medical treatment and prescriptions.
Generally speaking, experts agree that families should build an emergency fund equal to at least three months of their family’s expenses.
You should also save money for long-term goals, such as a down payment for your next home or college tuition. In this case, it’s best to put aside money into a separate savings account, especially if you want to make the most of compound interest.
Automate Your Finances
Regardless of whether you use a budgeting app or do everything manually, it’s best to automate your finances. This means you should have all regular paychecks direct-deposited into your bank account and be sure that your bills are paid each month automatically. For example, you can set up an automatic transfer from your bank account to pay your credit card bill in full.
Most importantly, you should automate your savings. This will allow you to save the money left after paying for your expenses, and you won’t have to bother about where to put it. For example, you can set up automatic transfers from your checking account to your savings account on a weekly or monthly basis.
Create a Fun-Yet-Free Activity Schedule
When you’re a single parent, it’s easy to fall into the trap of being too busy and stressed out. You may not have much time left over after work and taking care of your kids, so it’s easy to spend several hours just sitting on the couch watching TV after work and maybe going out with friends occasionally.
Although it might seem like fun, there is definitely more to life than TV shows and socializing with friends. That’s why it’s crucial to create a fun yet free activity schedule for your kids and yourself! You see, even if you don’t have much money at the moment, there are many interesting things that you can do with your kids without spending anything or only very little.
For example, you can organize a movie night at home and watch one of those great classics that everyone should see but never really do; meanwhile, you can make your own popcorn which is healthier and yummier than store-bought. You can also prepare an easy homemade dessert or treat for everyone to enjoy after the show – nothing beats homemade candy!
Another idea is to go on an adventure together with your kids and explore the world around you. Go for a walk in the woods or along the beach; go bird watching; go fishing; or walk around looking for wildflowers and mushrooms. These activities don’t cost anything besides some time – time that should definitely be spent with your kids!
Becoming a single parent can create a financial challenge, but that doesn’t mean you have to run yourself into the ground. It all depends on how you approach it. As long as you can set up a budget, build an emergency fund, and save money for long-term goals, then you’re good to go.
In addition, you should spend some time with your kids every week and even create a fun activity schedule that is free or low-cost. This way, you will be able to take advantage of the years you have with your children before they grow up.