Single Parent Budget: Tips on How to Create One that Works

Being a mom is hard no matter what, but being a single mom (or dad) is a whole different level of hard.  The mental, physical, and financial challenges are unique and can be difficult to manage. If you feel like you’re barely holding your head above water, you are not alone.

It doesn’t have to feel this way forever though. After reading this article, you will know the necessary steps to creating a realistic, single parent budget that works. You will feel empowered to take control of your finances so you can create the future your family deserves.

Step 1: Assessing Your Financial Situation 

The first step to creating a budget is to figure out exactly how much money is coming in each month (paycheck, child support, etc.) and how much you’re spending (divide into categories such as “groceries” or “kid’s activities”). You do this by writing down all of your monthly expenses, including bills and any other spending. You can find this information by looking at your bank and credit card statements for the last 3 months. Use the average of these numbers as your baseline.

Based on your findings, are you bringing in enough money to cover all of your expenses without having to use credit cards? If not, how much more money would you need each month to fully cover your expenses? You will somehow have to bridge this gap whether it’s by reducing spending, earning more money, or a combination of both. On the flip side, if you have more money than needed to cover all the expenses you will have to decide how you want to use this money.  

What to do if you’re in debt

If you’re in debt, you want to come up with a game plan to pay it off and work that into your budget. Here are the steps to take to get started:

1. Write down all of your debts including total amount owed, interest rate, and monthly payment amounts.
2. If you have credit cards, you ideally want to be paying off the “statement balance” each month to avoid interest. If you can’t afford to pay that much, you should be paying at least the minimum payment on all cards.
3. If you have extra money after paying the minimums, put it toward just one credit card (or other high-interest debt). You can use either the debt snowball or debt avalanche technique to decide which debt to focus on. Since credit cards typically have the highest interest rates of any debt, it is usually recommended to pay those off first.

Here is an article that goes more in depth on how to create a debt payoff plan that is manageable and realistic.

What to do with any “extra” Money

1. Put more money toward high-interest debt (like credit cards) to help pay it off quicker. 
2. Put it toward other financial goals or upcoming expenses. For example, “new roof” or “vacation.” Make sure you keep that money in a high-yield savings account (HYSA), so you benefit from compounding interest.  
3. Investing. Increasing contributions to your work-sponsored retirement plan (401k, 403b). This is especially important if your employer matches a partial amount of your contributions because it is basically free money. So make sure you’re at least contributing enough to get the full match. 
4. If you are already getting your full match, you should open an individual retirement account such as an IRA or a Roth IRA. Each of these accounts come with different tax advantages. Here is an article from Nerd Wallet discussing the differences between the two retirement plans.
5. Investing through a brokerage account https://www.fidelity.com/learning-center/smart-money/what-is-a-brokerage-account
6. Life insurance. As a parent, it is crucial to have life insurance to protect your children if something were to happen to you. You can purchase term life insurance for relatively cheap, I would steer clear of whole life insurance in most cases.  

Step 2. Creating a Realistic Budget

Now that you know your average total income and spending each month, it is time to create your actual budget. You will first assign money to cover all of your bills, including credit card payments. Then you will assign money to the different spending categories you have. Again, if you don’t have enough to cover all of the essentials, you will either need to cut spending in certain areas or find ways of earning additional income.  Don’t forget to include a category for unexpected or miscellaneous expenses and savings goals.

Some people create a monthly budget and others create one based on each paycheck. It will take some trial and error to figure out what works best for you. It is also important to be flexible as every month will be slightly different. If you do overspend in a category, see if you can readjust and “borrow” that money from elsewhere in the budget.

Money Saving Strategies for Single Parents

childcare

One of the biggest things that make financial management unique for single parents is the issue of childcare. While there are a ton of families who live on only one income (myself included), usually it is because one of the parents is staying home to take care of the kids. Single parents don’t have that luxury. They must rely on other family to watch their kids while they work or send them to daycare which is super expensive. So, what should you do if you don’t have family who can help, but also don’t have the money to pay for daycare?

If you are a single parent who is worried about childcare, the first thing you should do is look into what assistance programs are available in your state. Most states have programs to help parents who are working or in school pay for child care. In Ohio, this is provided through the Publicly Funded Child Care (PFCC) program. How much you pay is dependent on your gross income and family size, with some people not having to pay anything. 

You could also explore alternatives to traditional daycare which are typically less expensive. One option could be doing a baby-sitting exchange with another family. This is when two parents take turns babysitting each other’s kids during certain blocks of time. It works well when you have opposite schedules and is very cost-effective as no money is exchanged. A downside is that it can be difficult to coordinate.

Another option could be doing a nanny share. This is when two families hire one nanny to watch their kids simultaneously while splitting the cost. This is useful when you have a similar schedule to the other parent.

food shopping and meal prepping on a budget

One of your biggest expenses will likely be food, especially now as it seems prices for everything has skyrocketed. If you feel like you’re spending way too much however, you’re in luck. There are a lot of things we can do to control our food costs so we can reduce and stick to our budget. Check out this article 10 Easy Ways to Reduce Your Food and Grocery Spending.

SAVING ON TRANSPORTATION

Transportation is also typically a pretty large expense. While all of these strategies that I’m about to discuss might not be feasible, there are a few things you could potentially do to lower your transportation costs.

1. Carpooling

The first suggestion is carpooling. Ideally, riding to work with a coworker who lives close by or taking turns driving each other would probably be the most effective.  I know this might not be possible for many people. I also know that I would personally want transportation available for me at work when it in case my kid gets sick at school (or daycare).

Sometimes this can work though, so think about it with an open mind. Another carpooling option could be taking turns with another family to drive the kids to school or have them ride the school bus if that is an available option.

2. Work From Home

A different strategy to save money on transportation is to work from home. While you’ll likely still need childcare if your kids are young, you will save money on the commute. Another benefit to working from home is you save a lot of time since you don’t have to drive anywhere. You can also complete small tasks throughout the day while you work, like doing a load of laundry, which will make things not quite as overwhelming when you get off.

3. Use Public Transportation

Depending where you live and how big your family is, public transportation can be a great way to save money. Even if you own a car and only use public transportation for the commute to and from work, you can save money due to not spending as much money on gas, putting less wear and tear on your car, and not having to pay for parking.  

Building an Emergency Fund on a Tight Budget

As a single parent, it is crucial that you have an emergency fund. The majority of experts recommend saving 3-6 months’ worth of living expenses, but that can certainly feel unachievable when you are starting at $0 and already struggling to pay bills. Start with a smaller goal first such as $1000 and gradually increase your goal over time.

This is important because emergencies are going to happen. It is just a fact of life. You don’t want to go into (or further into) debt whenever something unexpected occurs. You should expect the unexpected and plan accordingly.

Get in the habit of contributing whatever amount you can afford each month or each paycheck. It doesn’t matter how small, just get in the habit. I highly encourage you to set up an automatic, reoccurring transfer into savings. This way it is a non-negotiable thing that you don’t even have to think about.

Leveraging Government and Community Resources

There is government assistance available for single parents, especially those that are low income. Food benefits are provided through SNAP (Supplemental Nutrition Assistance Program)  which is a federally funded government program that is implemented at the state level.

Low-income individuals and families may also be available for Medicaid which is a program that provides low-cost healthcare coverage. It is funded by both the federal and state governments, but managed at the state level. This means that benefits and eligibility requirements can vary depending on what state you live in.

There are also local resources for families in need such as food banks and donation centers. You should be able to find at least a few options for support in your area by doing a Google search.

Earning More Money

Since single parents typically have to do everything for their kids and the house, it doesn’t leave a lot of time for a second job or a “side hustle”. So, what are you supposed to do if you reduced spending everywhere you could, but you still aren’t bringing in enough money to cover your expenses?  Here are some ideas of ways to earn extra money that don’t require you to leave your house or take time away from your children. 

• 1. You can find freelance jobs such as virtual assisting, freelance writing, and graphic design on a website called Fiverr. 
• 2. Sell items you no longer need on Facebook Marketplace, Poshmark, eBay or other platforms.
• 3. Babysit for another family. This is nice because you can have your own kid with you while you babysit.

You Can Do It

Creating a budget as a single parent might seem overwhelming at first, but it doesn’t have to be restrictive or stressful. Think of it as a way to take control of your finances and build the life you want for yourself and your kids. Start small, be realistic, and remember to give yourself grace as you figure things out. You should be so proud of yourself for taking this step because it is truly life-changing.