If you are a single parent you already know how challenging it may be to take full responsibility for your family and kids. It means you are also solely accountable for the financial stability of your family. Life is rather expensive today so it’s necessary to learn how to budget and manage your personal finances if you want to survive financially and keep a tight handle on your funds.
Budgeting As a Single Parent
When you are the only person responsible for financial health in your family, it may be rather hard to plan your funds and manage monthly costs apart from raising your children and thinking about your future retirement. There are a lot of challenges in being a single parent but it’s quite possible to plan your future and take control of your finances. Budgeting is what can really help you.
What does it mean? A monthly budget is your plan for each dollar. The idea behind budgeting and money management is to understand how money works and realize how much you spend each month.
Many people don’t even know the exact sum of their monthly expenses. When you calculate it you may be surprised if not shocked. You may have tried to get about $200 loan when you urgently needed extra cash.
Overspending is the main reason why thousands of people have issues with saving and investing. In this article, we are going to talk about ways to manage your funds as a single parent and prevent financial stress.
Money Management Tips for Single Parents
Figuring out how to manage your finances and budget money may take some time but it doesn’t have to turn into a hassle. Here are the top pieces of advice on how to master budgeting as a single parent:
Define What You Owe
Being a single parent, you are solely accountable for the financial situation and stability of your household. You should aim to ensure your family’s needs are met. Keep in mind that budgeting doesn’t happen all of a sudden. It surely takes some time to master the basics of money management.
Collect all of your monthly bills, go through them, and try your best to pay them all. If you find some bills that are coming due but can’t be paid on time, make sure you notify the service providers and negotiate these payments.
Repay Current Debt
Another important step toward the financial well-being of your household is repaying existing debt. Create a list of all your current debts including student loans, the mortgage, personal loans, etc. Now it’s time to gather your debts and pay them down according to your repayment schedule.
You need to make sure you find enough money in your monthly budget for debt repayment if you want to avoid additional charges or late penalties. You may want to cut down some expenses or limit them to essentials at least for some time until you become financially secure.
You can lower spending on TV-related costs, phone services, insurance premiums, groceries, and eating out. Moreover, miscellaneous spending such as vending machines or coffee can also be omitted.
Remove Joint Debt
Handling joint debt is an essential step toward reaching financial independence and improving the monetary situation in your household. For instance, you may still share a loan or a credit card with your ex-spouse.
This situation may negatively affect your personal finances. You need to divide this debt between the two of you so that your ex-husband or wife transfers his or her portion of the debt on his or her credit card. In other words, you want to repay your own debt.
Take into account that making an agreement with your ex-spouse to divide the debt payments into accounts that include your name may hurt your credit history in case your ex fails to repay his or her part.
In case the person failed to repay the joint credit card debt when a couple’s divorce decree mandates him or her to do it, you may file contempt of court documents against your ex. However, your credit rating may also become lower in the meantime. Make certain you make at least minimum payments to maintain a decent credit score.
Create a Monthly Budget for Your Expenses
Once you understand what you owe and have a strict plan on how to repay existing debt and improve the financial stability of your family, you need to make other adjustments to keep up with this plan. Creating a budget is an essential part of money management for a single parent.
There is a wide choice of online tools and apps that allow consumers to create a virtual budget and stick to it. Choose an app or a tool that is free of charge and submit spending categories including utility bills, entertainment, transport costs, groceries, etc.
You will see how much you actually spend each month and where your income goes. A traditional scheme involves allotting a particular sum of your income to each spending category. Online calculators and special tools will help you with that. Of course, your housing expenses, car costs as well as food expenses will be the highest. According to Statista, the average annual expenses of consumer units in the USA were $7,316 on food.
However, if you add up insurance and debt payments, child care and clothing costs, medical and miscellaneous expenses, as well as savings and investments, you will understand the importance of budgeting so that you have enough for each category.
Bottom Line
Apply these money management tips and make budgeting easier even being a single parent. You will notice the difference and find it faster to save money, reach your financial goals, and build wealth. Furthermore, you will serve as an example for your children and teach them about budgeting and taking control of personal funds.
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