The Single Parent Budget Guide
Why budgets for single parents matter and how to make the most of your money.
Budgets for single parents should account for incoming money and outgoing expenses to make day-to-day and upcoming costs more manageable. Preparing for the unexpected with emergency funds is also critical to creating and following a practical budget. Learn the basics of making a budget and try our seven tips for single parents.
Why should single parents make a budget?
As a single parent, it can be highly beneficial to create a budget. Whether you have sole or joint custody of your kids, a budget can help your family unit stay financially stable through typical and unexpected situations. There are many benefits for single parent households to have budgets in place:
- It gives you more control over your own money
- It reduces stress and supports your mental health
- It helps you focus on and achieve your financial goals
- It keeps you informed on what you're spending
- It makes it easier to keep tabs on your savings and debts
- It helps you plan for unexpected costs
With a budget in place, it's much more comfortable to handle day-to-day planning and decision-making with greater confidence. Additionally, working through unexpected situations and planning for the future become significantly easier for families.
What are the basics of making a budget?
Bank of America gives these seven essential steps for creating a budget in any situation:
- Calculate your net income: The first step is determining what money you can work with each month. This would include your take-home pay, which is total wages or salary minus deductions for taxes and employer-provided programs such as retirement plans and health insurance.
- Track your spending: Once you know what money comes in, you need to figure out where it's going every month. Organize, categorize, and track your necessary and extra expenses to determine how much you're spending and identify where you could cut back or save.
- Set realistic goals: Before reviewing your expense tracking, form a list of both short-term and long-term financial goals. These will look different for every family, but some examples might include setting up an emergency fund, buying a house, saving for your child's education, or paying off your debt.
- Make a budget plan: Use your expense tracking information to determine the variable and fixed expenses you'll face in the coming months. Compare this information to your net income and goals so you can set specific spending limits for each category of expense.
- Pick a budgeting method: Whether you prefer the 50/30/20 budget, envelope method, or something else, choose an approach that best fits your short-term and long-term goals.
- Adjust your expenses to stay on budget: Once your income and spending are documented, you can make adjustments to ensure that you don't overspend and that you're allocating money toward your goals.
- Review your budget regularly: After you set a budget, it's crucial to review it and your spending on a regular basis to make sure you're staying on track. You can also use this time to make any necessary changes.
What are some single parent budgeting tips?
Many single parents face unique circumstances that can impact them financially. Here are seven helpful tips for single parents to keep in mind when creating a budget.
Tip #1: Consider your custody situation
If you have sole custody of your child, you'll need to account for all their expenses within your family budget. Alternatively, if you have joint custody, you can attribute some of your child's financial needs to your ex, like insurance coverage or clothing. Both you and your co-parent need to have a good sense of each person's responsibilities, which should be outlined in your parenting plan to avoid confusion.
Tip #2: Include child support
Depending on your state's calculations, you might receive or pay child support. It's crucial to include child support payments in the budget creation process and adjust amounts as things change. If you receive child support payments, that amount will need to be added to your net income. If you pay child support, it will need to be included as a regular expense in your tracking.
Tip #3: Account for joint debt and expenses
If you and your co-parent have a mortgage or any other shared finances, this also needs to be taken into account when creating your budget. These expenses are a common hidden cost of divorce, especially when properties and retirement plans must be split. Both parents need to determine their share of the debt and pay it off accordingly.
Tip #4: Prioritize emergency savings
As most parents know, unexpected situations tend to pop up more frequently when children are involved. When setting realistic goals during your budget creation process, it can be especially beneficial to prioritize an emergency fund. Hoping for the best while preparing for the worst can safeguard your child's well-being as well as your own.
Tip #5: Automate your payments
Fees and interest can quickly add up for missed credit card and utility bills. To avoid these surprises, consider scheduling payments for housing, credit cards, and other parts of your budget that offer the option. Getting these costs planned ahead of time protects you from unexpected expenses, financial stress, and diminished funds.
Tip #6: Find free and low-cost options
It's no secret that most things are expensive or getting pricier. An easy way to make the most of your budget is by finding free alternatives and discounts for what you need. From choosing summer activities that fit your budget to using pro bono or low-cost legal help, making every effort to save money will make the most of every dollar you have.
Tip #7: Track shared expenses
With shared custody, you and your co-parent will each contribute to lots of expenses for your kids. From everyday school-related expenses to special treats and holiday gifts, many costs may need to be split after they're paid. Record the amounts and reasons for your purchases so you and your ex can ensure they're covered evenly.
TalkingParents makes budgeting a breeze
Documentation is essential for any shared parenting costs. Having a way to keep tabs on shared payments makes it easier to track expenses when creating and following a budget, and that's where TalkingParents comes in. Our Accountable Payments feature enables you and your co-parent to make money requests, schedule recurring payments, and securely send or receive funds. With all payments documented on an Unalterable Record, it's easier to organize and track your co-parenting expenses.