Many single parents find it difficult to keep afloat with their finances, let alone begin a savings plan. Cash goes into paying household bills, keeping food on the table and paying school and childcare fees.
Saving a Small Amount
Many people save whatever is left over at the end of the pay cycle. A more productive way is to stash a small amount in a different location at the beginning of each cycle, even a small amount of $20, into a separate account. Having this cash in another location takes away the temptation to spend it. Over time a small saving can mount to a mini holiday, a new television or an amazing christmas. Having a defined goal as to what this money is for makes saving first that much easier.
Knowing Where the Cash Goes
For a period of time, write down every single cent spent. Include groceries, coffee, bills, fuel, payments, the 50 cent lollipop bought to keep the kids quiet for a while. At the end of every pay cycle, make a spreadsheet of all expenditures, and possibly be surprised as to where the money is actually going. Strategic spending plans can be adjusted to work based on the figures collected. Many single parents have discovered that by taking their children shopping with them, they can spend up to $50 extra each trip. Writing down everything spent helps identify spending areas that can be modified.
Blow the Budget
Not literally. “Budget” is like “diet”. The motivation and the focus is there, but after a few days the will power tends to disappear and the binge begins. Look at this in a different way, there is have x amount coming in every pay cycle. Now plan how the money is going to be spent, this is called strategic spending.
$600 a fortnight for a single mother and her 3 year old daughter
- $30 into savings account, paying oneself first
- $230 a fortnight on Childcare
- $45 fuel a fortnight
- $80 a fortnight on fresh food, including fruit, vegetables, meat, milk
- $25 a fortnight on pantry staples, including pasta, rice, flour, sugar, tea, coffee depending on what is required
- $35 into envelope for bills like phone, water, electricity, internet, car registration, drivers licence renewal
- $30 for entertainment, for example movies, DVD hire, excursions to zoo, aquariums, museums
- $40 for incidentals
- and the last $85 to be divided into other areas that are important
This is not a budget, and although it looks and feels like a budget, it gives the flexibility and the choice of where money goes.
Rent or mortgage payments, debt repayment like credit cards and personal loans would also be factored in. Clothes are a personal choice of whether they are factored in or not. Altering spending plans during sales time is a great way to include a clothing budget.
Reducing Family Clothing Costs
Switching fashionable and “must have” items for simple, stylish garments is a cost-effective way of freeing up household cash. Becoming more stylish will create a more versatile wardrobe that will last longer. Saving cash and then investing in a more expensive peice of clothing is actually more efficient than purchasing one cheap thing every fortnight. Plan clothing and wardrobe, make lists and stick to them when clothes shopping. Update seasonal looks with cheap costume jewellery, scarves and different hair styles.
Get a Diary
Note down when money comes in,and when any direct payments come out. If it can be arranged, have some money come out the same day the money goes into one’s account.
For example, if a $700 payment comes in Wednesday midnight, have the savings amount come out automatically, loan repayments and any other fixed amounts come out first thing Thursday morning. This is one less thing to think about by having it automated, and possibly the money may not be missed. Speak to the bank for more information, direct payments are relatively simple to set up.
Single Parenting and Money
- Set up a savings plan. Put aside a small amount each pay cycle for emergencies or other areas that are important, for example a deposit on a house or a holiday every year.
- Write down every single cent spent. Doing this will show exactly where the money is going.
- Plan where money is going to go. A spending plan is a live object, it can be altered, modified and changed when necessary.
- Forgo fashion and become classically stylish. This season hottest top will look dated within a few months. Get the most out of clothing by choosing peices that will not date.
- Have an automated system for fixed expenses, like bills, rent or mortgage, childcare, or loan repayments. This provides one less thing to worry about, and never having seen the money, it will not be missed.
Once a clear understanding of where household cash is going, necessary changes can be made. Feeling in control of spending can be created by knowing where the money is going, having automated payments and reducing amounts spent on unnecessary items.