Budgeting for Single Parents
When you go to the grocery store, it’s smart to take a list of the items you need to feed yourself and your kids. The list helps you shop more efficiently because you’re buying only what you need. If you spend less than the amount you had planned to spend, maybe because you were able to find some essential things on sale, you may feel that you’re able to add a treat like ice cream to the basket.
Creating a household budget is a lot like managing grocery shopping. By making a list of your regular monthly expenses, like rent, food, utilities, transportation, and childcare, you’ll know what your costs are and you can start to figure out how to allocate your income so it covers your needs. In fact when you make your list of expenses, put it in a chart with four columns. Your expenses go in the first column. Label the second column “Proposed Budget,” the third column “Current Spending,” and the fourth column “Difference.”
Track Your Spending
To make a budget, you need to figure out how you’re spending your money now.
You’ll know right away what some of your current costs are. They’re your fixed expenses and are the same every month. Your rent is one example. If you use a monthly transit pass, that’s another fixed cost. Write those amounts in the “Current Spending” and “Proposed Budget” columns.
Others, like food, are variable, or flexible, rather than fixed costs. You may spend a similar amount each time you go to the market, but it’s not always the same. Variable expenses are useful when you budget because they are places where you can cut back if you have to.
But you do have to figure out what they are. Take a month to track where every penny goes. You can use a notebook or an app on your smartphone or other electronic device to record your spending, including a description of what you paid for, the amount you spent, and the date. Each week add the total by category, such as food, kids clothing, school expenses, and utilities. Be sure to include payments you make on credit cards and loans. At the end of the month, add the weekly totals and put those amounts in the “Current Spending” column. You may discover that you are spending money on some things that you didn’t put on your list, so you’ll have to add them.
When you have a dollar amount for every entry in your expenses list, add them up. If you are spending less than your income, you are in good shape. But if your expenses are the same as or more than your income, you need to make a change in the way you’re spending. That’s what your budget will help you do.
Make Your Budget
Using your income as the starting point, subtract your fixed expenses to find out how much you have left for variable expenses. Then, using your current expenses as a guideline, allocate amounts for each variable expense to the “Proposed Budget” column.
When each line has a dollar amount, add them to find out the proposed budget total and subtract that amount from your income. If your planned spending is close to or less than your income, you can begin to put your budget plan to work.
This is where the hard part starts, because it means you have to watch where your money goes and make adjustments if you are spending more than you planned in any category. If it turns out at the end of the month that your estimates for certain categories were wrong, reallocate the amounts in the next month's budget to provide more money for places you had underestimated. Of course, that means you must cut back somewhere else.
As you can see, budgeting is an ongoing process that depends on your being aware of what you’re spending and prepared to make adjustments as necessary to keep yourself out of debt.
What if your proposed budget would mean you were spending more than your income? This is a serious problem that requires reducing spending in many categories, including things that are necessary, like food and clothing.
Resolving Some Budget Problems
Unless you can increase your income to help bring your spending in line with the money you have available — which is probably difficult if you are going to school and raising children — you need to make some spending decisions.
- When your lease is up, could you move to a less expensive home to allow you to transfer money from the fixed to the variable category?
- Can you reduce utility use by turning off appliances you aren’t using, keeping your home cooler in winter and warmer in summer?
- If you have a car, could you spend less if you switched to public transportation?
- Can you cut back on cable and phone bills by choosing a more economical plan?
You may find other ways to economize as well, including shopping more carefully, looking for sales, using coupons, and collaborating with your friends on certain costs, liking sharing childcare costs.
Budgeting isn’t easy, but it is well worth the time and effort to improve the way you manage your money. In the end it will pay big dividends.