Being a single parent comes with many challenges, and many single parents – especially single moms – face unique financial challenges and struggles.
You may be trying to pay down your debt. You may be struggling to manage your everyday expenses as a single-income household. You may be wondering how you will pay for your child’s college education. One study found that it costs an estimated $233,610 to raise two children from birth to age 17 in a middle-income family with two parents. It can be even more challenging for single parents who might not have the support of a partner to help along the way.
Building a budget as a single mom can be really challenging, especially if you haven’t had an education on personal finance. But as the provider, you are solely responsible for your family’s finances. That’s why a good budget is absolutely critical for your financial success as a financially independent woman.
When you’re shouldering the financial burden for your family, it’s extra important to plan out your finances, manage your expenses, and care for your children – all while building wealth. Committing to a monthly budget makes it easier to keep up with your finances and brings more accountability and understanding into your life…Especially if becoming financially independent is the ultimate goal.
If you’re looking to learn more about how to be financially independent as a single mom, here are our top tips for budgeting.
Why is budgeting important as a single parent?
Budgeting is especially important for single moms who may be raising a family on a single income. Why? Well, many single moms often receive child support (and, in some cases, alimony)…but many do not. Even if you do receive these payments, child support isn’t always a reliable source of income for single mothers. Those payments only go so far.
Having your own budget and your own financial understanding can take a lot of pressure off managing your finances solo. Benefits include:
- Avoid overspending
- Stop living paycheck-to-paycheck
- Start saving money each month
- Time to create plans to pay off debt
Many women feel as though it’s difficult to achieve financial independence in marriage…And it can be! That’s why you should start your journey as a single mom with a positive outlook: you now have control over your finances, and you’re starting to take your (financial) life back, one step at a time. Read on to learn more about budgeting! The right budget will significantly improve your finances – and your life.
8 Tips for Budgeting as a Single Mom
Here’s everything you need to know to get started on financially planning your future.
1. Track your monthly spending
Do you know how much money you spend each week, and on what? Understanding your spending habits is the first step toward creating a balanced budget that works for you and your family. Before you budget, take some time to list out all the monthly fixed expenses you have (for example: electricity bill, rent, school fees, etc.) and any other monthly expenses. Once you understand how much money goes towards bills, you can start breaking down all the money you spend otherwise. For example: do you eat out every day? Do you spend a disproportionate amount of money on something flexible, like clothing or movie tickets? Once you figure out where your money is going, you can take the next steps in making your own budget.
2. Focus on your emergency savings
When single parents are in survival mode, they often forget about a crucial part of their savings: their emergency fund. Every emergency fund should have three to six months of basic living expenses (housing, food, bills, etc.) put away for that rainy day. The type of emergency can vary, but the important part is to have that money available at any time, just in case.
The concept of an emergency fund changes just a little as a single mom, too. As a single mom, your emergency fund needs to include your child’s basic expenses as well. Those expenses should include anything your children may need for school, like tuition and textbooks, or other financial commitments.
This is such an important step in your financial freedom journey as a single mom, and you simply cannot understate the importance of the emergency fund. If anything happens, you will feel secure in knowing that you have some room to breathe as you figure out the next step.
3. Pay off debt
I know, I know – you’re probably thinking, “How can I pay off debt as a single mom?!”
The truth is that you can pay off your debt even if you have a low income and dependents. And paying off debt is a really important part of a healthy and successful financial future. Let’s face it: debt from credit cards, loans, and other high-interest loans are expensive, and you can rack up thousands of dollars in interest each year. That adds up! It’s money you can be saving for something meaningful, like a vacation or a down payment on a home.
So how do you go about paying off debt? Well, once you have an understanding of your monthly spending, look at your expenses. Is there anything you can cut out? Anything that seems redundant or unnecessary? This exercise is difficult at first, but it works. And the faster you get out of debt, the quicker you will obtain financial freedom. Generally you want to prioritize paying off debt that charges the highest interest rate first. Once you’ve paid off that highest interest debt, take the money you were paying there and start shoveling it at the next debt until you are home free!
Another strategy that might work for paying off debt involves taking a bird’s eye view of your finances, popularized by Dave Ramsey. Take a look at your debts, from lowest balance to highest balance, and prioritize your smallest debts by paying as much as you can towards those debts while making minimum payments towards your other debts. Once you knock off that smallest debt, you cross it off the list and move on. This can be psychologically rewarding as you reduce the number of accounts you owe.
If you have decent credit, consider getting a personal loan to consolidate high interest debt. Credit unions often offer low interest personal loans, so be sure to shop around. If you own a home refinancing your mortgage or getting a HELOC could be another great way to lower interest rate payments. Be careful about this option, though, especially if you put your home on the line. Do not free up space on your credit card with this strategy and then fill it back up just to lose your home!
There are different strategies to paying off your debt. So pick the one that works best for you. The bottom line here: focus on paying off your debt immediately to save you money in the long run.
4. Prioritize expenses for you AND your children
When you build your budget, you need to include expenses for yourself and your children. It sounds simple, but many single moms forget to do this. That means adding in expenses like school trips, back-to-school clothes, weekend activities, and school lunches, for example. These are all necessary and mandatory expenses, and you need to add them into your budget each month. You’d be surprised how fast they add up! When you put these expenses into the budget, you’ll have a more complete understanding of how much true disposable income you have.
Newly single moms: this is even more important for you! With your newfound financial independence, it’s important to understand your expenses now that you’re single. For example: who will handle child care expenses and health insurance? Will you need a babysitter at some point? Do you have insurance premiums to worry about? These factors are all things you will need to worry about now that you are single.
5. Find free things to do
There’s no denying it: kids’ activities and outings can be really expensive, especially if you’re on a budget. Paying entry tickets for amusement parks to tickets to the zoo to simply buying lunch while you’re out… things can get pretty pricey. You may not have as much disposable income on your new budget, especially if you’re trying to pay off debt or focus on saving for a goal.
And that’s completely okay. Why not take advantage of the many free things to do where you live? There are so many ways to spend some time outside, try something new, and spend little to no money.
For example: do museums in your city have free first Saturdays? If so, you can pack a lunch to go and visit the museum for free. Your local library may also offer kid-friendly events. Many cities will offer free festivals, activities, and other things to do on the weekends.
And none of that takes into account nature-based free activities, like picnics, going to the beach, hikes outdoors, or playing in the park (grab a frisbee!). There are countless amazing ways to enjoy your weekend without breaking the bank.
6. Don’t forget about long-term goals
Just because you’re on a budget doesn’t mean that you have to forgo your savings and your dreams! You just have to build your goals into your budget, that’s all. When you’re building your budget, include your long-term expenses, goals, and plans in the budget as well.
Planning a trip to Maui in two years? Break down the expenses and set aside savings.
Do you need a little fund for school trips and back-to-school shopping? That needs to go into its own savings pouch, too.
It’s all about planning ahead and thinking about everything you might need in the future and setting aside money to make it happen. You need to think about bigger long-term goals, too, like owning a home, starting a business, or traveling. There’s no goal too big! One way to achieve those long term goals? Investing! Investing doesn’t have to be complicated, either.
7. Automate finances (where you can!)
You’re a single mom, and you’re super busy. That’s why you need to automate your finances whenever you can. It’s all too easy to forget to set aside a certain amount of money or pay a crucial bill. If you leave it up to chance, there’s a good chance it may slip your mind. And late bills can sometimes accrue extra payments on top. Don’t let this happen!
Automating your finances can bring an extra level of peace and simplicity into your life. With everything automated, you won’t have to worry about paying your electricity bill, for example, and you will avoid costly late fees.
How can you get started? Call your providers and set your bill due dates to the same date (or shortly after) you are paid. This way, you can be sure you will not overdraw your account.
While you’re automating, why not automate your savings, as well? Set up recurring transfers to your savings accounts to help achieve your goals. Automatic transfers will help build up your savings, whether that be your emergency fund or your long-term savings.
8. Increase your income (if you can!)
One of the best ways to reduce financial stress? Increasing your income. This is a great strategy for single moms who still have a tight budget, even after cutting expenses. Increasing your income can help you move away from the paycheck-to-paycheck lifestyle because you will be earning more than you spend.
There are so many ways to increase your income – and if you’re considering this, you should think about the option that works best for you, your family, and your lifestyle.
The easiest way for many people involves asking for a raise, especially if they have been at their jobs for a while and perform well. Before asking for a raise, do some research and get curious. What do others earn for this type of role? Do you deserve to earn above average for any reason? What is inflation like? All of these questions will help determine the exact increased amount you should ask for. You might also consider looking for another job with an employer who will pay you what you are worth! AAUW has good free salary negotiation workshops to help you gain more skills and confidence in this area.
Another way to increase your income? Side hustles. Side hustles are often really popular with single parents – especially single moms – because they can create their own schedules and still earn good money.
If you do want to go down this path, consider doing what you already do for your full-time job as a side hustle. Do you edit whitepapers for a living? Or design graphics? Why not pitch individual clients and find independent contract work?
Alternatively, you can go in a different direction and open an online store following your passion, jump into virtual assisting, and so much more. Side hustles can impact your taxes, though, so keep that in mind and perhaps consult a financial advisor to learn more about your options.
Key Takeaways
The bottom line: it all starts with a budget. When you think about how to achieve financial independence, you may feel overwhelmed. Budgeting as a single mom can be difficult…but it is not impossible. Factoring in fixed and variable expenses, setting aside savings, and taking into account debt can all help you build a stronger budget. With a little bit of planning, you can build a budget and take control of your financial future. And if you need any guidance, we’re here to help you every step of the way.
