Sometimes making ends meet or paying bills on time is a major struggle for single parents. Creating a budget and sticking to it can certainly help relieve financial stress and give you a higher sense of accomplishment. When creating a budget start the essential expenditures such as:
• Housing-Expect to spend between 30-40% of your income on housing
• Child Care-Depending on your family size and daycare situation this could be up to 40% of your monthly income
•Health care premimums and expenses can eat up about 20% of your income
• Transportation-Depending on the type of automobile you have this should take about 10-15% of your income
• Food-Depending on your family size this should cost about 15% of your monthly income
• Utilities-Up to 10% to 15% depending on usage.
• Savings-It is wise to try to save 10% of your income for your future or emergency situations.
• Clothing-You should allow for about 5% of your income to purchase clothing
• Entertainment-Try to sock away 2% of your income per month for a night out that might just save your sanity
You might have noticed that the above percentages do not add up to 100%- they go over 100%, which is the reality of what the majority of single parents struggle with-less income than expenses. Most of the time it is not an issue of excessive living, it is just the fact that single parent families generally earn less than double parent families and less than half of the single parent families receive child support. Budgeting is an important step to living with financial success.
When creating a budget write out how much you anticipate spending each month. You might have to track your actual expenses for a few months so that you can be very specific about what you are spending. Save all of your receipts and bills, and don’t forget to include that $2 you spent at 7-11 before work for a cup of coffee and a pack of tic-tac’s. That expense should be included in the food category. If necessary put your receipts and bills in piles according to each category and make new categories if necessary. Add up the amounts according to each category. If you own a home, include the homeowners insurance in that category. If you own a car don’t forget to include the cost of gas, oil changes, other maintenance as well as the monthly payment. If you already know exactly how much your are spending each month, then you can move forward with writing down exactly what you spend on a monthly basis as well as what you would like to try to save if there is income left after expenses. This becomes your monthly budget that you will try to follow as closely as possible. Whenever you can, try to save for emergency situations. When your savings reaches a certain level without being spent, you may have just earned a vacation!
Next time I will write about some cost cutting things you can do to try to trim the expenses to get them closer to 100% of your income.
For additional tips on Frugal Living, visit the Families.com Frugal Living Blog.