Contributed by Alban, a personal finance writer at Home Loan Finder.
Being a single parent is hard enough when you have no one to discuss your feelings with, no one to back you up on punishments, and no one to share your childrens’ milestones with. On top of the loneliness, the financial stress and constant worry can be even more isolating, especially as everyone else seems to be able to give their children every luxury – not to mention every new toy and game.
As a result, budgeting in single parent families looks a little different to how families with two parents do it, even if only one parent in a two parent household is working. As a single parent the same rules apply when it comes to your budget, but at the same time you need to find ways to be more committed, more frugal, and more independent. If you are a single parent struggling with your budget and finances, try out these five tips:
1 – Know your expenses
The first step to any budget – married or single – is to know where your money is going. Start by listing all of your monthly costs from the phone bill to the new phone cover you had to buy after your toddler stepped on your mobile.
As you look at where your money is currently being spent, make sure your list is accurate and detailed. Look over bank statements, or keep notes of your spending if you forget where your cash goes once you withdraw it from the ATM. You will then need to keep your budget updated from month to month so that you know at any one time how much money you have left to spend.
The website that accompanies this blog is designed to help you track your spending. Try it out at www.spendingprofile.com.
2 – Look for places to cut back
The key to financial security as a single parent is to spend less than you earn. Even if your budget shows a surplus at the end of the month – and especially if it doesn’t – look for places you can save money. For example:
- Cut back on pay TV as there is a lot of time you’re not watching all of the channels, and getting outside with the kids is not only cheaper, but better for everyone.
- Cut back on bad habits such as smoking and drinking, not only because these are expensive vices, but also because as a single parent, you need to make sure you’ll always be there for your children.
- Drink as much water as possible and avoid buying cordials and soft drinks for your family. Water is much cheaper as it comes from the tap, and if you don’t like the taste, invest in a $20 water filter jug to keep in the fridge.
- Make your own lunches so you can avoid costly food court food, and your children can have an affordable and healthy alternative to the canteen. Simply make larger batches of meals for dinner to ensure left overs, or pack sandwiches or soft tortillas with their favourite fillings.
- Clip coupons or search online for deals and specials at your local stores and supermarkets.
- Have a family movie night at home by renting movies or swapping with friends instead of paying for parking, tickets, snacks and drinks at the theatre.
- Conserve water and power as these are likely to be some of your bigger bills. You can do this by turning down the water level on your dishwasher and washing machine, opening windows in summer and putting on more clothes in winter to save on cooling and heating. Plus, don’t forget to turn off the lights, and encourage your children to do the same.
- Make sure your finances are working for you by shopping around for a fee-free transaction account to avoid monthly and transaction fees.
- Use your mobile less and look for a home phone plan which gives you free local calls. Alternatively, email your friends to catch up for free.
3 – Look after your emergency fund
When you are a single parent there is no one else there to bail you out, so you need to be financially prepared for an emergency. In your budget you should already be saving the surplus from your wages, and you can add to that by cutting back on expenses.
Also make sure you avoid credit card debt, no matter how much of a perfect solution it seems. A credit card is a short-term solution and can lead to more financial issues in the future when the balance needs to be repaid and interest keeps on compounding.
As you make regular contributions to your emergency fund, make sure you are using a dedicated high-interest savings account. High-interest savings accounts are usually online accounts, which means you can avoid account keeping and transaction fees and avoid the the temptation to use the funds, as they are not accessible through an ATM card.
4 – Save and plan for your future
You should also consider budgeting for contributions to your long-term savings plans, to help you save for your retirement, save up to buy a house to get out of the rent trap, or save for your childrens’ future and education.
As a single parent you rely on yourself, and you need to be independent. At the same time you need to be doing more than just surviving; you also need to remember – and achieve – your life goals. You can do this by opening a term deposit account which will lock your savings away for up to five years at an even higher interest rate.
5 – Adjust your expectations
The key to sticking to any budget or financial plan is believing in it. Therefore, you need to adjust your expectations and realise that you can’t compare yourself or your life to two parent or two income families. Instead, you may have to work full time, and you may miss some school events. You probably can’t afford the same extravagant holidays that your childrens’ friends are going on with their parents, but what you can do is work out what you can afford to do.
Look at ways to make your situation work for you by negotiating flex time at work so you can see your kids on their sports day or in the school play. Make up the time by working later or earlier two days a week. You may have to save a little longer for your holidays, but that doesn’t mean you can’t take your family on an adventure.
Remember that there is no such thing as quality time; there is just time with your family. Your kids will be happy to be with you when you go to the bank or the grocery store, as long as you are happy and secure for them.
Alban is a personal finance writer at Home Loan Finder, a home loan comparison website.