Saving money as a single parent can prove difficult. Bills must be paid, groceries covered, and children provided for. All this and more from just one salary instead of two. And while there are particular circumstances where single parents may find financial relief, many struggle with the added budgetary stressors.
Will you have enough to take some time off from work? Does your current financial situation allow you to save for the future? What if something goes wrong, will you be able to cover the expenses?
No matter the concern, establishing sound financial practices is imperative for single parents. The best way to get on track is to set aside money in savings. Savings gives you the chance to have cash reserves in case of emergency while helping ease the burden of single parenting.
Keep track of your checkbook
Money in vs. money out. That's what saving money boils down to, at least in a broad sense. While many single parents believe they have a firm grasp on their income and expenses, many are surprised come the end of the month when they take a look at their account statement.
That's why balancing your checkbook is a must. It is a process that you must respect. And it's going to take time.
To visualize where you're spending money and where you're earning it you need to sit down and create a spreadsheet. Not a complicated one. Just one that shows income against expenses. Make sure you track all expenses, too.
Pull up your bank statement and write down expenses in one column and income in the other. Separate expenses into those that are recurring and those that are more impulsive. Balancing your checkbook and seeing where your money is spent is a great way to get started saving money.
Set a goal and trim the fat
You've balanced your checkbook and now understand where your money is being spent. That's great! Now time to dig deeper.
The next step is to look at where you currently stand and set a goal for savings. How much is it that you would like to save per month? Per year? You'll need to think about bigger picture financial goals such as vacations, retirement, college funds, etc.
Once you have this goal set (and if you need help a good principle is to put 20% of income towards savings) it's then time to look at your expenses and see where you can cut costs. It won't be too hard, either. By already separating all expenses you'll visualize them much better, and you'll see how small expenses add up fast.
Take, for instance, your daily caffeine fix. Is it really too much trouble to make coffee or tea at home? Doing so can save up to $150 per month! That's quite a bit towards future savings.
Another good rule? Try starting with the necessities. Add up your necessary expenses only. These include housing costs, grocery budget, insurance, utilities, and transportation. Doing this also helps you visualize just how much you may be frivolously spending. Look at these and make note of ones that can be reduced. Utilities are often a big one. Cut back on your cable or internet package, bundle up at home to save on heating costs, and always make sure to turn the lights off when you leave a room.
Find a Good Credit Card
You may be surprised to see this on the list. Credit cards can be both a hindrance and lifesaver for single parents. If managed well they will be the latter. Here's how to accomplish such.
First, find an option with outstanding credit card rewards. From cash back to points to other incentives credit card companies extend many offers to get consumers to sign-up. Find one with a low interest rate, minimal fees, and plenty of rewards. By taking advantage of credit card benefits you will extend your dollar a little further each month, if you manage your balance properly.
That's the next step in the process of managing your credit card as a single parent. Manage your balance wisely by paying it off as soon as possible. To avoid fees and interest rate charges, you will ideally pay the card off each month. This allows the card to act as a direct extension of your normal checking or debit account. Use it for necessary purchases that must be covered, and pay the card just as you would these. Set aside the amount in your checking account and apply it to your credit card balance so you can keep earning points while avoiding debt.
Pay Off Your Debt
Don't worry if you're scratching your head on this point after reading a suggestion on finding a good credit card. Single parent finances are confusing. However, one general principle of saving money is to eliminate any debt.
Debt often brings with it interest charges. It can also bring lower credit scores and financial profiles. These are two critical elements in establishing a better future. That's why you should know what debt you have and seek to pay it off. Do this before hammering away at your savings, too.
What debt should you pay first? There are many theories out there. Some advise you to tackle all debt at once while others say to go at it piece-by-piece. One of the best suggestions on how to eliminate debt is to look for where you are being charged the most interest or fees and go after that. That way you aren't just throwing money away every month. Once you get to paying these off you'll start seeing more room to save money. If that doesn't make you feel good, who knows what will.
One of the hardest parts about being a single parent is budgeting time. There never seem to be enough hours in the day. And when it comes to meals? Think again. Single parents often struggle to save money because they are spending so much on dining out, picking up dinners and paying unnecessarily high food costs.
Thankfully meal prep has you covered. And boy do we live in an age of meal prep proliferation.
Check any Pinterest board or social media site and you are sure to come across a way to meal prep for one, two, three, four, or however many individuals fill your household. Don't be hesitant to seek this information out. You'll need to plan ahead to make meals in advance, but doing so will save you money and time in the long run.
Want to make it even more enjoyable? Have your kids participate! They'll enjoy the process of getting hands-on while you enjoy the added help. You can meal prep breakfast, lunches and dinners. Soon you'll be the envy of not just single parents but ALL parents.
Planning ahead doesn't relate to just food, either. Take a look at the events schedule of your kids and plan a budget as necessary. Will there be any future expenses that are event-related? If so, start to plan for these by setting aside some money or factoring it into your future financial projections. That way when the event comes you won't feel stressed about unplanned expenses. When it comes to saving money as a single parent, any cost you can anticipate or method of planning ahead is crucial.
Set up Automatic Savings
One of the easiest yet most overlooked ways to save money is to direct part of your income into a savings account. This should be done after you establish a budget with necessary expenses.
At least 50 percent of the money remaining after your bills are paid should be routed into a savings account. But don't just transfer the money from your checking. Doing so leaves you prone to using those funds elsewhere. Instead talk with your employer or revenue source and ask for them to direct a portion of your income into your savings account.
Another great rule to follow is the 50/30/20 rule. This budget rule holds that half of your income goes to personal and necessary expenses, 30 percent towards luxury items and 20 percent into savings.
Every parent – not just single parents – should teach their children how important it is to save. Yet, as a single parent, saving money can be difficult. Added financial burdens lead to money mismanagement, stress and sometimes much worse. It doesn't have to be this way.
By setting aside time to look at your finances and seek sound financial advice you will find yourself saving in no time.