Not everyone can get along well, being a single parent.
Responsibilities are beyond normal understanding, and the mental strength required is unparalleled to stereotypical parenting!
With that being said, single parents must have a firm grip over their finances, and track their income minutely, while factoring each and every section of savings and expenditure. And for doing so, one should have a stretchable and handy single parent budget!
This post is meant to describe the aspect of getting hold of a budget that you can stretch as per your own terms while being a single parent!
So, here are some points that you need to go through if you want a flexible and stretchable budget to function at its best.
Always have those extra savings for unexpected expenses
No matter what budget you are aiming to use, an additional savings vault is always necessary for tackling all sorts of unexpected and unplanned expenses.
The biggest reason for having this savings structure is to fight medical expenses and obviously any type of uncalled for situations that pop up in our lives every now and then. Examples can range between anything from your child’s surprise announcement of a school trip, to your car breaking down one sunny morning.
Using credit every time for compensating these emergency expenses might not be profitable! So, whatever is your income, you should be focused toward building a separate savings amount.
And, don’t mix it up with your general savings!
Habits are important before you plan to stretch a budget
Budgeting is good, but it can’t help you if your financial habits are lame and gross. A good money personality is a primary requirement for achieving financial freedom.
You must have the mentality to double your savings as much as you can. And, staying away from debts should be an optimum priority.
If you constantly fall into debts and have the tendency to rely on debts every time you run low on cash, instead of skipping the expenses altogether, then no budget can save you.
Stretching a budget is a mere terminology, as your income is fixed, and all you are doing is expanding and contracting expenses as per your needs.
Therefore, debts are definitely something you should not indulge into.
So, what can you do with debts?
You need to use credit cards, only in cases of emergency, and for buying objects that will profit you over time.
The same gets applied to personal loans and other forms of unsecured debts. And, make it a commitment, never to take out payday loans, even if you are having tough times and are running cashless!
Payday loans are traps, and it’s very difficult to get out of them, as they have incredibly high-interest rates, that surely drains out heavy amounts of cash, from a consumer.
Learn to compare debts based on their character and interest rates. Not all debts are equal, and not all debts are good to have in your money portfolio.
Secured debts like mortgages and all are considered to be investment vehicles, but credit cards, payday loans, and other unsecured debts are typically deemed as unprofitable and waste of money.
Therefore, prior to starting out with a budget, you need to materialize some good money behaviors, like:
- Using cash for most of your purchases and transactions.
- Keeping those credit cards locked up, only to be used for emergency purposes, and for replacing other high-interest debt tools, like when possible transferring your payday loan debt into credit card debt, or paying off medical bills, and all.
- Teaching your kids about money management from an early age, and not influencing an expensive mindset.
- And, last but not the least, maintaining the continuous act of saving money, even by squeezing out pennies from a low income.
Follow a budget, that really works out as planned
Any random budget does not provide enough options to stretch it as you want. Most of the budgets come in a fixed format, that might not be manipulated too much. And, if you manipulate, then the budget won’t function well or will become a different budget altogether.
Like, say for example, you are using a 50-20-30 budget, where 50% of your income is to be kept for normal monthly expenses, 20% is for savings, and the rest 30% will be used for luxury or other emergency expenses.
Even though you can manipulate the percentage figures, but increasing one section will decrease the other two. One month, if you increase the savings percentage, then you have to reduce the monthly expense section or the luxury/emergency expense section.
It might look that it’s not a big deal, but as the month progresses, you will be facing severe difficulties.
Hence, the best budget for you will be something that is not limited by percentage figures, or fixed allocations.
The best budget for you is the Zero Based Budget
In this budget, there are no fixed percentages or a stable format that will be controlling how your income gets distributed to the various expenses or monetary obligations for a month.
In this budget, you will decide what expenses you wish to have for a month, and how much amount you will dedicate to each of them.
The name is Zero Based Budget because it brings down the difference between your total income and total expense to zero.
This is how the budget works. Based on the idea from a previous month, you will be listing down all the expenses you might typically have in the current month.
Any expense that you feel is not mandatory; you can skip it out easily by not listing it in your expense sheet.
To remember, you should also consider savings as a part of your expenses, since that will also take out a portion of your income. So, define set amounts for each of the expenses, and sum it up to see the total expense amount you got to deal with, in the month.
If this amount is higher than your income, then you need to reduce your expenses or lower the dedicated amounts for each of the expenses.
And, if the total expense amount is less than your income, then you can plan anything you want with the leftover.
If the amount is equal to your total income, then revise your budget once again, and finalize it for the month.
Once the budget gets fixed, you cannot derail from it, unless an emergency expense pops up!
Oh! Well yes! I guess I already told you at the beginning of the post to always keep a dedicated amount for unplanned expenses beyond your normal savings behavior. Pay attention to that.
You can’t expect to tackle a heavy unplanned expense with one savings vehicle, or a stand-alone income!
You are a single parent, and you probably have only one stream of income. In that case, you should never skip the unexpected savings amount. And nevertheless, you should always try to earn more with side hustles.
More is the income, and less headache will it be for you.
That’s all you had to know about following a stretchable budget. Use it as you want, but be sure to revise your budget each month for better results.
Andy is a blogger at Penny Less Dad and financial writer associated with the Oak View Law Group. He is a debt expert and a member of several online forums where he shares his advice as well as tips to lead a financially independent life.