The rising cost of living in the U.S. is placing a strain on many household budgets. In the aftermath of a COVID-19 crisis which disrupted earning power for many working Americans, we have faced ever growing consumer costs, sustained inflationary trends, and skyrocketing interest rates. Everyday expenses are making it difficult for many individuals and families to make ends meet.
The pressure to make ends meet is even greater for single parents. For single moms and single dads alike, managing child care expenses on just one income can be extremely challenging. Of course, having children is one of the most rewarding parts of life for many families. But to be blunt, it’s also one of the most expensive parts of life for most families.
From food, clothes, and toys to child care, health insurance premiums, and college savings accounts, the costs of being a parent are considerable. If you are taking these costs on by yourself, you’ll need a plan. From managing a monthly budget to saving money for the future; from achieving financial security to achieving true financial freedom, reaching your goals as a single parent requires discipline, hard work and more than a little sacrifice.
Naturally, it’s a good idea to find ways of saving money at every turn. So you may want to check out our feature on the best ways to save money on your monthly grocery budget. Otherwise, read on for some helpful budgeting tips for single parents.
Why Single Parenting Is So Challenging
While both single mom and single dad households can face challenges making ends meet, many of our tips are directed toward single mothers. This is for a few reasons.
First and foremost, according to an article in Penny Hoarder, single moms make up 80% of single parent households. This is compounded by the general wage gap between male and female earners. According to recent data from the Pew Research Center, women earned 82 cents to every dollar earned by a man in 2022.
Penny Hoarder notes that single mom households earn a median income of just over $51,000. And while many single moms do receive child support payments for ex-spouses, the average monthly minimum payments for child support can be as low as $286. For many family’s finances, this sum may barely make a dent, even in just the basic cost of child care.
As Penny Hoarder reports, “In many states, the average cost of child care can take up 40% or more of the single-parent budgeting for basic living expenses. And that’s long before we consider the cost of health insurance or other insurance premiums.”
Those numbers add up to one simple fact–financial stress may be a daily reality for many single parent households.
10 Tips for Single Parents Living On a Budget
In spite of these harsh realities, it is not only possible to survive as a single parent but to obtain financial freedom and a brighter future for your children with a realistic plan. That plan begins with the 10 steps outlined here below.
1. Assess Your Financial Situation
The first step is to gain a full understanding of your actual financial situation. How much do you spend on both fixed and variable expenses every month? What is your monthly budget for essential household goods? Do you have childcare costs?
And how do these costs relate to your assets and your earnings? What is your monthly take home pay? Do you collect monthly child support (or pay monthly child support)? Do you have retirement savings accounts, college savings accounts, and/or an investment portfolio? If so, are you on track for meeting your savings goals?
Apologies for bombarding you with a ton of questions all at once. The point is that you’ll need to conduct a thorough review of your financial situation based on a healthy past sample size. Not sure where to start?
Sofi suggests that the best way to do this is to begin by “gathering your financial statements for the past several months, then using them to figure out your average monthly income (after taxes), including any child support or alimony you receive. Next, you can tally up your fixed expenses (monthly bills) and variable expenses (clothing, food, entertainment) to see how much, on average, you are spending each month.”
Once you’ve fully evaluated your income, expenses, assets, and debts, you’ll be able to see exactly where your money is coming from and where it’s going. This is a critical first step because that knowledge will be vital as you make spending, saving, and budgeting decisions.
2. Create a Detailed Budget
Speaking of making budgeting decisions, you’ve obviously going to need to build a practical budget, one that realistically reflects what you can afford to spend month to month. Begin by listing all of your monthly expenses, including fixed costs like rent/mortgage, utilities, and insurance, as well as variable expenses like groceries, transportation, and childcare.
Using the information you gathered during the review of your financial outlook, you should be able to allocate the appropriate amount to each spending category. If you’ve never created a budget before, we’re going to very strongly advise you to enlist the free and readily available support of a budgeting app.
It’s pretty easy to find a reliable budgeting app. Most personal finance websites have their own variations on both budget calculators, spreadsheets and templates for your convenience. But if you’re looking for a few leads, check out our list of the most helpful budgeting and spending apps out there.
3. Find Ways to Lower What You Pay on Essential Expenses
Now that you’ve categorized all of your expenses, it’s time to move through them with a fine toothed comb so you can find ways to trim your spending. As a single mom or dad, your starting point should actually be your fixed expenses–those that you have to meet every month.
Take a closer look at your non-negotiable expenses, such as housing, utilities, and groceries. You’ve already identified how much you allocate to each of these expenses. But are there ways that you could be spending less?
As you take a closer look at these expenses, consider areas where you believe you might be able to lower your costs by switching to a different provider, by applying for an assistance program, or even by negotiating lower rates.
Sofi suggests that, as a single parent, you “hone in on your recurring bills to see if there are any ways to lower them. You may now be living on a single income, which can involve some lifestyle tweaks. You might be able to switch to a cheaper cell phone, for example. Or, maybe you can find a better deal on car insurance or ditch your cable subscription.”
With a well chosen set of streaming services, you may be able to save hundreds of dollars every month just by saying goodbye to traditional cable costs. And when it comes to shopping for groceries and other household essentials, you may just want to up your coupon clipping game. Put aside 30 minutes each week to identify scheduled sales, to build a shopping list around certain coupons, and to minimize what you spend every time you hit the checkout counter.
And finally, if you really find that your budget is being strained by your expenses, you may need to consider the somewhat more consequential move of downsizing. Is it possible that you could relocate to a smaller and more affordable living situation?
While it may not sound like a particularly desirable option, you could save thousands or tens of thousands in housing costs every year. For homeowners, this could be the fast path to paying off a mortgage and gaining full financial freedom.
All of this is to say that while there are certain goods and services you must pay for every month, it doesn’t mean you couldn’t be spending less on some of these items. Take a deeper look at your basic living expenses. There may be more ways to trim the fat off of these fixed expenses than you realize
4. Lower Your Child Care Costs
In the section above, we offer just a few ways to reduce your fixed costs. However, we left child care costs out of that conversation. That’s because this expense generally commands its own area of discussion. After all, child care is often one of the costliest line items in a single parent budget.
As noted above, many single moms will pay as much as 40% of their monthly budget on childcare alone. Especially for single parents with young children, it can be nearly impossible to balance work responsibilities, shopping, carpooling, meal prep and everything else that goes into day to day life without a little help.
But that help is rarely cheap. For many families, child care can be the single biggest strain on the household budget. That’s why the article from Penny Hoarder “recommends looking into financial assistance programs, if you’re eligible. Employer-based child care benefits and flexible spending accounts are other ways you can save money on child care.”
You may also want to explore affordable options within your community, such as community centers, places of worship, family members, and friends. You may also want to consider entering into a cooperative arrangement, sometimes called a nanny share, with other parents. By pooling together funds to hire a nanny who can watch multiple children at once, you may be able to cut those child care costs to a fraction of what you might be spending for full time daycare.
Speaking of daycare, you should also consider a bit of comparative shopping. While the sticker price for many of the daycare facilities in your community may be fairly similar, each service may have its own set of scholarship and assistance programs for families with unique financial challenges.
With this in mind, make sure that your comparative shopping process includes direct conversation with each daycare facility. Ask questions about their financial assistance programs or direction to local community services that can help. While many daycare centers will hold off on advertising these assistance programs to the general public, many do have tuition assistance programs. What’s more, many of these assistance programs are uniquely designed to address the needs of the single parent household.
5. Cut Unnecessary Spending
Now that you’ve spent some time whittling down what you spend on your monthly fixed expenses, it’s time to turn your attention to your discretionary spending. Review your budget for everything that you spend on recreation–from dining out and attending events to shopping for clothes and buying cool home decor.
See where you have room to reduce or even eliminate some of that discretionary spending. You may have to be more selective about when and where you go out for dinner. Perhaps you’ll want to consider making more coffee at home instead of stopping at Starbucks every other day. It’s pretty likely that you have a handful of streaming services and other subscriptions that you don’t use–or that you may not even realize you’ve been paying for all this time.
Of course, it’s important to enjoy life, and to make the most of your free time. After all, you work hard. And you should have a budget put aside so that you and your family can truly enjoy that free time seeking fun and adventure. But in order to make ends meet, you need to plan carefully, and be selective about how you spend your recreational budget.
If you’re not sure how to do this, check out our article where we ask the question–is it ok to spend money on having fun?
6. Set Savings Goals
Now that you’ve taken steps to trim the fat off of both your fixed and discretionary expenses, it’s time to take a closer look at the strategies you use for saving money. Do these money management strategies align with your financial goals?
Naturally, before you can answer that question, you need to be able to identify these goals. Think about your top priorities? What are your short-term and long-term financial goals? Are you saving to buy a new home or to undertake major renovations in your existing home?
Are you saving for your children’s higher education? And what about your retirement goals? Are you contributing regularly to retirement accounts like a 401(k) or IRA to secure your financial future? These are all important savings priorities. Now that you have a clear understanding of your budget, you’ll want to figure out exactly where saving fits into the picture.
As a single parent, you may want to start a few automatic savings plans. Sofi advises that “Automating can also be a great idea when it comes to saving. Often referred to as “paying yourself first,” you may want to set up an automatic transfer of money from your checking to your savings account on the same day each month, perhaps right after your paycheck gets deposited. This prevents you from spending those dollars or having to remember to transfer the funds to your savings at a later time.”
Regularly scheduled automatic transfers in small increments can be an easy way to start saving toward your goals without feeling too much of a pinch.
7. Build an Emergency Fund
Regardless of your other savings goals, every household should have an emergency fund on hand. If you haven’t already begun to do so, you’ll want to prioritize emergency savings. This is another area where automated transfers can be extremely helpful.
Start a separate high interest bearing emergency account and divert small and regular increments into this fund. Most financial experts advise that your emergency fund should be large enough to account for anywhere between three and six months worth of living expenses.
Consult your budget for a better understanding of exactly how much that is, then begin building your emergency fund accordingly.
8. Look for Government Support Programs
These tips are designed to help you achieve financial success, both for you and your children. Do not overlook the special tools and programs offered by your government to help you arrive at that point.
Simply stated, your taxes pay for a host of government programs that may be designed to assist people in your exact situation. In order words, you may be entitled to an array of support services, many designed just for single parents. Make sure you take advantage of everything for which you are eligible.
Look into government assistance programs that you may qualify for, such as food assistance, housing subsidies, and child care subsidies. Do some online research into grant and scholarship programs from private companies and retailers as well. Some of these programs may offer extra money or steep discounts on back to school shopping; help paying for school lunches; or access to items donated through food and clothing drives.
These programs can help ease your financial burden and make it easier for you to handle monthly expenses on which you have less wiggle room.
9. Track And Monitor Your Financial Outlook
Now that you’ve gotten the full scope of your finances, it’s important to remain on top of everything. Budgeting is not just a one time exercise. If you’re doing it right, you should be able to track expenses at all times. This, in turn, should provide you with a clear sense of whether or not your plan is working.
Are you still struggling to make ends meet? Is your income sufficient to meet your expenses and match your savings goals? Have fluctuations in the cost of some goods made it more difficult to make ends meet? Do improvements in your earning power give you a bit more disposable income and saving potential?
Review your budget regularly with some of these questions in mind. Be prepared to adjust as needed to accommodate changes in your financial situation, goals, or in the border economy. For this type of ongoing adjustment, you may want to consider the support of a financial advisor. Many financial advisors provide this type of ongoing monitoring and adjustment as part of their service packages.
10. Seek Professional Advice
If you are a single parent, seeking professional advice could be a true difference maker. A financial advisor can help you take every one of the steps described above. The right advisor can guide you through the steps of budgeting, cutting expenses, and identifying the best financial products for meeting your short and long term goals.
You should also consider consulting a financial advisor who specializes in working with single parents. Many financial advisors will offer specialized knowledge in dealing with divorce agreements, unraveling client finances from those of an ex-partner, managing child support arrangements, and enrolling in government support programs for single parents. If you are working to get by as a single income household, the right financial advisor can provide all kinds of valuable budgeting tips for single parents.
And as we discussed in a recent article, financial advisors are not just for the fabulously wealthy. These financial professionals are accessible and valuable to everyday consumers like you.