Money is the main source of stress in any household. Single parents, in particular, are more likely to feel the burden of financial pressures. With a single, often lower, income it can be harder for single parents to put money aside and plan for expenses, emergencies, and certain luxuries. Thus, budgeting is incredibly important for single parents. Budgeting helps track where your money is going and ensures that you can always have the ability to meet your upcoming fiscal needs. Here are some tips to help single parents successfully budget.
Track Your Income and Expenses
The first step for single parents in budgeting is to keep an accurate record of their income and expenses. Break down all your expenses into necessary and nonessential items. Knowing where your money is coming from and where it is going is the bedrock of successful budgeting. You can keep track of your finances in a document or create a budgeting spreadsheet. Knowing this information can help you make better financial decisions in the future.
Create Savings Goals
Creating financial safety nets are important for single parents. It is always helpful to have a rainy day fund that can be accessed in the event of an emergency. Set goals for yourself that make saving a priority such as increasing the amount of money saved every month. This will reduce stress in the long run if an unplanned expense arises.
Make a Debt Payment Plan
Many single parents have to face debts from a spouse’s past spending habits, medical bills, student loans, and other obligations. Debt can be daunting, so it’s important to assess the situation and create a plan to pay it off. Start off by focusing on the debts with the highest interest rate and work your way down. This will save money and build credit. Making regular payments and decreasing debt will free up money in the future and give you more control over your finances.
Use Automation When Possible
To ensure that money is saved and bills are paid on time, single parents should take advantage of automation when budgeting. Automation can be used to transfer money from one account to another and to set aside specific amounts for savings and debt payments. You can save time by using automation and avoid missing important payments. It is also helpful to set up alerts or reminders about upcoming payments and due dates.
Take/ Maximize Tax Deductions
Single parents are able to qualify for several tax credit and deductions. Take the time to learn about what can help reduce taxes and maximize deductions to save money. The IRS tax deduction eligibility is based on income level so the more deductions you are able to take, the higher your refund can be.
Take Inventory of Your Time and Skills
When there is not a second person helping with finances, it is important for single parents to get creative when it comes to earning additional income. Look at how you spend your free time and consider resources such as freelance work or an on-call or part-time job to supplement your income. It is also important to think about how you can better use your skills in a marketable way. Through doing this you may be able to not only increase your income but also develop or improve skills and take other professional advantages.
Seek Professional Financial Advice
It is always beneficial to seek out advice from a professional financial advisor when unsure how to manage your finances. Contrary to what many single parents think, there is no need to uproot the entire family if their finances were disorganized. A financial advisor can help budget and plan for the future and come up with creative ways to reduce expenses and save money.
Budgeting is the most important step that single parents can take to alleviate financial stress, improve their current financial situation, and increase financial stability in the future. You can start off by tracking income and expenses, creating savings goals, and having a plan to pay off debt. Automation and tax deductions can also help save money and time. Lastly, single parents should explore ways to make extra money and consult with a financial advisor if needed. Through careful planning and budgeting, single parents can take charge of their finances and ensure a healthy financial future.