Having a single-income household with dependents can require some fancy footwork in your financial repertoire. If you were in a dual-income household before (or maybe just before you had a dependent) and you didn’t have a budget, this might be a good time to readjust your strategy. There are often unexpected expenses that come with having kids and our goal is to keep you out of debt. A single-mom budget can help with that!
If you have debt and want some tips on tackling that part of your budget, check out What to Do When You’re Broke: A 6-Step Plan.
Having a budget is not only fruitful for your financial well-being, but it’s also helpful for your mental load. A budget isn’t about restricting your spending, but about finding ways to spend more on what is most important to you, and spend less on what is not important to you (like credit card interest fees!).
I have a bunch of free resources in this guide to help you with practical steps to increase your net worth.
Here are 10 tips for creating a single-mom budget.
Tips for Creating a Single Mom Budget
1. Assess Your Financial Situation
Start by listing all sources of income, including your job, child support, and any other assistance you receive. Next, detail your monthly expenses, such as housing, utilities, groceries, transportation, childcare, insurance, and debt payments.
Pro tip: If you have never created a budget before, I recommend looking at the last three months of statements and finding how much you have spent on different categories like groceries, gas/transportation, beauty, school expenses, and entertainment.
2. Set Clear Financial Goals
Define your short-term and long-term financial goals. These might include paying off debt, building an emergency fund, saving for your child’s education or a trip you want to take together, and your retirement.
I have your emergency fund how-to guide here.
3. Create a Realistic Budget
When you are making a budget, it’s easy to get caught up in the “dream version” of what you wish your budget could look like. But if it’s not realistic, you will only feel frustrated every month that you go over. That’s why I recommend looking back on the last three months of your expenses. It might be easy to start thinking “Yeah, but that month isn’t the norm because XYZ came up”. But XYZ might come up more often than you realized. If it’s not a birthday party, then it’s a car repair. If it’s not a car repair, then it’s back-to-school expenses. Try your best to be realistic about your budget.
There are a bunch of different opinions on the best way to create a budget, but a good rule of thumb is to put in your needs first, and then fill in the rest with discretionary spending. I really like the values-based budget for my clients, but you might also want to check out something like the 30/30/30/10 Rule. If you get paid on a bi-weekly basis, creating a bi-weekly budget may also be helpful.
4. Track Your Spending
You’ve got a budget, now what? This is actually the part that I think is the most fun (and most important). It’s one thing to have a game plan, but it’s an entirely different thing to be able to see that game plan through.
Keep track of your spending for the month and pay attention to anywhere that you might need to edit. If you notice that you continuously go over in one category, you either need to give yourself a bigger budget in that category, or you need to figure out how to spend less money in that category. This might seem obvious, but remember that if you give yourself a bigger budget in that category, that money has to be cut from somewhere else.
Why do I think this step is so much fun? If you can think of this like a game with yourself, it can be! This is when you get to actually see your savings account grow, you get to start making investments, and you get to build self-trust as you stick to your plan consistently.
These 19 Free Printable Budget Templates can help you stay on track.
5. Reduce Unnecessary Expenses
Of course, one of the things that a budget might help you realize is how much of your income is going toward unnecessary expenses. For instance, you might notice that you spend $300 on eating out every month. That’s $3,600 a year. If you make $45,000 per year, that’s 8% of your gross income. It’s up to you how you feel about that allocation, but unless you are doing the math, it’s amazing how often we overlook what our money is actually being spent on.
I also think that using the equation I did above and figuring out what percentage of your total income a certain category is using can be really helpful when you want to make changes in your spending habits. Personally, when I saw how much of my total income my beauty budget was taking up, it did not align with my values and I felt more strongly encouraged to change my pattern.
6. Debt Management
Part of creating a budget is mapping out your debt expenses. I would recommend listing out the different interest rates and the total amount due for each debt owed. It’s important to know the individual interest rates because high-interest rates likely need your attention more immediately.
There are different approaches to paying off debt, but if you want to make the most of your money, it could be wise to pay attention to high-interest debts and work your way down to the lowest.
7. Automate Your Bills
The best way to budget is to have as much automation as possible. This will ensure that you don’t miss a due date, and help ease your mental load so that you can focus on more important financial steps (like building wealth).
Set your bills to autopay and have your savings and investing funds set to auto-transfer as well. Keep just enough to cover your expenses or a hiccup in your checking account and everything else should be set up to be auto-transferred for either a bill or a savings/investing goal.
8. Plan Ahead for Seasonal Expenses
In 2022, 35% of Americans went into debt for their holiday spending. But this year? That’s not going to be you. Planning ahead for season expenses that you know will be a future expense can help you navigate things like holidays, birthdays, or regular trips.
Have a spot in your budget that is set aside for these seasonal expenses. That way, you won’t be under as much financial strain when they come around and you will get to enjoy the moment (instead of stressing about the added debt!).
9. Involve Your Children
One of the best tips I can offer to parents, regardless of whether they’re single parents or not, is to involve their children in their finances. No, no, I don’t mean to discuss the stress of bills and fully unveil them to the adult world, but you can do small things that will help the child build financial literacy and confidence from a young age. And when it’s a family activity, you might begin to enjoy it a bit more too!
It’s up to you to decipher age-appropriate ways, but there are lots of different ways to involve your kids. This could look like having them grocery shop for their school lunches with a portion of the grocery bill, involving them in vacation planning, or helping them set up and manage a small monthly investment contribution.
The real reason I want you to have a single mom budget? So that you can get to the good stuff, the wealth-building stuff. That’s right, I mean investing. And by investing, I mean less Wolf of Wallstreet and more automated, invest and chill, build wealth on autopilot kind of investing.
A budget can help you reach your financial goals, and hopefully, you know how important it is that investing be one of them. There is a step-by-step guide on how to start investing here.
As mentioned above, the best way to start investing is to have a budgeted amount automated to your brokerage every month. It’s really that simple, and a budget can help you prioritize this.
Before you say “I don’t have enough to invest”, let me remind you that even $25 can make a difference.
Why You Need a Single Mom Budget
A budget is here to help you avoid crises and prioritize essentials. With a budget, a single mom can allocate funds to cover essential expenses like housing, utilities, groceries, and childcare before getting caught up in discretionary spending. This will help you make sure your family’s basic needs are always met.
It can help you avoid overspending by setting limits for different categories. This will help you prevent the accumulation of unnecessary debt and help maintain financial stability.
A budget can also help you save for emergencies. Creating an emergency fund as part of your budget allows you to set aside money for unexpected expenses, such as medical emergencies or car repairs. This fund will help provide a safety net and reduce stress during challenging times.
If you have debt, a budget is going to help you pay it off systematically and in a way that will make the most of your time and money. Being debt free is not out of reach– it can happen and a budget will help get you there!
A budget will also help you create savings and investing goals. There is a free class about investing here, but let me say this– if you don’t want to be working the day of your funeral, you need to be investing. If you don’t want your child to have to figure out how they will pay for your care when you are older, then you need to be investing. If you want to build wealth at all, you need to be investing. And it’s easy to get started. More on that here.
Finally, a budget will help to reduce your financial stress and increase your future security. Having financial uncertainty can be taxing on your mind and body, and even take a toll on your relationships. Having a budget can help you build a plan for your financial future (and let’s be honest, what area of your life do your finances not impact?). Plus– the confidence that comes from having your finances in order can and will roll into other areas of your life. Watch out, you might make a budget and next thing you know? You might be asking for a raise or be making more money than you ever had before.
(That might sound like an exaggeration, but that’s happened for more of my clients than I can count.)
If you are ready to dig more into your money mindset, check out this free guide.
Single Mom Budgeting Mindset Tips
When you are getting used to budgeting, hiccups will happen. But the more you educate yourself and practice, the easier it will become. Before you know it, sticking to your financial goals will be like second nature!
1. Visualize success
Envision the positive outcomes of your budgeting. Visualize yourself achieving your financial goals, experiencing reduced stress, and providing stability for your family.
2. Empower Yourself
View budgeting as a tool that empowers you to gain control of your financial situation and create a better future for you and your children.
3. Get Educated
Embrace a mindset of continuous learning. Educate yourself about personal finance, budgeting strategies, and money management to make informed decisions.
Be kind to yourself. Remember that budgeting is a process, and setbacks are natural. Treat yourself with the same patience and understanding you’d offer a friend.
5. Goal-Oriented Thinking
Keep your financial goals in mind at all times. Each budgeting decision you make should align with your goals, whether it’s building an emergency fund, paying off debt, or saving for a specific milestone.
6. Small Steps Matter
Recognize that even small, consistent actions can lead to significant financial progress over time. Celebrate each step forward, no matter how small it may seem now.
7. Resilience and Adaptability
Understand that unexpected expenses or changes in circumstances are part of life. Develop the ability to adapt your budget when necessary while staying committed to your goals.
8. Mindful Spending
Practice mindful spending by considering whether a purchase aligns with your values and goals. Avoid impulse buying and take time to evaluate if a purchase is truly necessary.
9. Positive Attitude
Approach budgeting with a positive mindset. Focus on the progress you are making and the goals you are achieving, rather than dwelling on challenges.
10. Seek support
Don’t hesitate to seek advice, guidance, or emotional support from friends, family, or support groups. Connecting with others who understand your challenges can be incredibly motivating.
Creating a budget as a single mom is a necessary step to help mitigate financial stress and set you up for financial security. It can help you pay off debt, reach your savings goals, start saving for retirement and build wealth through investing, and be prepared for unexpected expenses.
An added bonus to budgeting is the new awareness of and the sense of control that can come from knowing what you spend your money on is aligning with your values. This can have a tremendous impact on the rest of your life, including (but not limited to) seeking out greater income opportunities, savvy ways to save money, and increasing your network to include mentors and peers who have achieved similar financial goals.
Creating a budget can also be a great way to include your children and help them develop financial literacy. The more you learn, the more you get to share with them, and the earlier they get to develop their financial literacy skills.
If you want some more free resources for developing your budget, check out this free guide.
Creating a budget is a huge step forward in your financial success as a single parent. Take a moment to appreciate the steps you are taking and visualize the future that awaits you as you stay consistent and committed to your goals. Happy budgeting!