The Single Parent Budget Guide
Why single parents should make a budget and how to create one.
Why should single parents make a budget?
As a single parent, it can be extremely 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. There are many reasons why a single parent household should have a budget in place:
- It gives you more control over your own money.
- 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, day-to-day planning, decision-making, handling unexpected situations, and future planning becomes significantly easier for families.
How to create a budget
Bank of America gives these six steps for creating a budget:
- Calculate your net income: This is 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: Now you need to figure out where your money is going. Organize, categorize, and track your expenses to determine how much you’re spending on what, and where you could possibly 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 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.
- Adjust your spending to stay on budget: Once your income and spending is documented, you can make adjustments to ensure that you don’t overspend and that you’re allocating money towards 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 necessary changes.
Budgeting tips for single parents
Many single parents are faced with unique circumstances that can impact them financially. Here are some 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 likely need to account for all their expenses within your family budget. Alternatively, if you have joint custody, you can likely attribute some of your child’s financial needs to your co-parent. It’s important for both parents to have a good sense of what their financial obligations are, which should be made evident in the parenting agreement.
Tip #2: Include child support
As a single mom or dad, you might receive or pay child support. It’s crucial to include child support payments in the budget creation process. 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
If you and an ex-spouse or partner have any joint debt, this also needs to be taken into account when creating your budget. 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 arise more frequently when children are involved. When setting realistic goals during the budget creation process, it can be beneficial for single parents to prioritize an emergency fund. This is for your child’s well-being as well as your own.
Tip #5: Track shared expenses
If you are in a co-parenting situation that involves any shared expenses for your child, documentation is important. Having a way to keep tabs on shared payments will make it far simpler to track expenses during the budget creation process. TalkingParents offers the Accountable Payments feature, which allows co-parents to make payment requests and securely send or receive money. All payments are documented, making it easy to go back and reference anything later. Learn more about how Accountable Payments helps co-parents here.