When you’re supporting a family on a single income, budgeting becomes more than trying to decide if you can afford dinner out once a week. You not only have to make sure your earnings or other money supply stretches to last through the month—you also have to make provisions for unexpected expenses and future expenses like health care, purchase of a home, college, and more.
That’s a lot to handle on a limited income. It’s the rare person who can balance all the financial needs of the family perfectly—but anyone can become an expert on where their money goes, and that’s the important first step.
Keep a notebook (or spreadsheet, if you like doing things on the computer) of expenses every day. Enter into it everything you spend—and I mean every penny. If you put money in a parking meter, enter it. If you give the kids money for an ice cream or a movie, enter it. Don’t worry yet about what category it falls under, but do note what the money was used for. If your kids just ask for “money”, find out afterwards what they spent it on.
After a week, review your expenses and assign them to categories that make sense to you. If you think ice cream belongs under “entertainment” instead of “food” or “treats”, that’s fine—but remember that making distinctions like that will force you to comb through grocery store receipts to categorize every item. Budgeting should be easy enough that it doesn’t become a second job in itself. Here is a list of common categories that you can choose from. Remember that if they don’t make sense to you, they won’t work, so mix and match or combine categories to reflect your actual thinking about spending:
Repeat this activity every week until you have a month’s worth of data. By that time, you will have paid credit card bills, rent or mortgage, and utilities—those should be included in your list of expenses. Then look over your expenditures for the month. The fixed expenses you can’t do anything about—that’s why they’re fixed. There might be small gains you can make in some things like utilities, but at this stage of the budget game, don’t worry about it.
A good combination of essential expenses to shoot for is 30-15-15. That’s:
- 30% of your income on housing: includes rent or mortgage, utilities, maintenance and so forth.
- 15% on food: it’s recommended you keep this to necessary food, the kind you buy at the grocery store. If you shop wisely, that should make all other food (restaurant meals, lattes, lunches bought at work instead of prepared at home) fall neatly into the “entertainment” category. It’s much easier to cut back on this category.
- 15% on transportation: includes car payments, insurance, fuel and maintenance.
That leaves 40% of your income to cover clothing, insurance and/or medical payments, entertainment, debt repayment, and miscellaneous. Part of that “miscellaneous” should be some kind of savings plan.
If your figures for the month show that you’re paying significantly more than 30% for housing, you need to take some action. If you can’t think of any easy solutions that will work for you (such as taking in renters, moving in with family, and the like), here are some links to housing assistance programs that might be able to help:
- HUD – Housing Choice Vouchers Fact Sheet
- Local HUD Information by State
If you find you’re spending much more than 15% of your income on food, it’s possible you’re not doing everything you could be to minimize this expense. Here’s some helpful links on how to cook nutritious and enticing food your kids will eat, and that will also help a lot in your budgeting efforts:
If your expenses fall within the ranges above, good for you! You’re completely average! Now why not do even better in the savings category by trimming items you really don’t need from the other categories? The only sure-fire way to make money is to save money.
If you are pretty computer literate, and you find you kind of like the budget process, try to find a copy of Quicken or another computerized budgeting tool. These are basically more sophisticated spreadsheets, with all the budget aspects already programmed. They have common expense categories already set up, but you can still add your own.
This is a great tool to have, because at any time you can see all your finances at a glance. With paper records, you’re stuck with pulling out statements to compare where you were last week or last month, and having to manually calculate where you are this instant. But again, the tool is only valuable if you keep it up, and are computer-savvy enough to use it to full advantage.
Does the whole budgeting process sound too boring for you? Don’t fret—there are many like you. You don’t like to nit-pick about expenses, but at the same time you need to get control of your spending. The following story is a more philosophical view of budgeting from someone who managed to rein in her spending without becoming an accountant in a little green cap:
One important thing to keep in mind when budgeting as a single mother is that most likely, you’ll have to cut back somewhere. That “somewhere” might be things that your kids are used to having, like cable TV, or lots of snacks in the house, or maybe spending money that you don’t keep track of. It’s important to share with your kids that the family’s budget needs to be under control, and they might have to give up some of these goodies. Don’t worry—they might make a fuss about it, but if you’re firm and keep explaining to them that giving up a little now, might prevent giving up a lot later, they should be capable of understanding.
You might have some success by enlisting them to help you meet the budget when shopping. Instead of a brand-name cereal they like, send them on a mission to find the generic brand, and compare how much cheaper it is. Or (a better bet, since kids are so computer-savvy), put them in charge of finding recipes on the Web that you can make with inexpensive, basic ingredients, instead of all the over-priced prepared foods the shops try to entice you to buy. If you have girls, see if they’re interested in learning how to make bread and pizza dough, or even something really challenging like canning. For boys, send them off to a mechanically-inclined relative or trusted neighbor to learn how to change the oil on the car, or do basic home repairs. They’ll not only help the family save money—they’ll learn skills they can use their whole lives to continue the tradition of common-sense budgeting and saving.