Creating Your Single Parent Family Budget
As a single parent, money is tight. You know you need to make a good personal budget, but you just haven't got around to it. Before you get started, you need to know where all of your money is going.
First, decide how you will track your budget. The back of a napkin is probably not the best choice, and it can be time-consuming to set up a spreadsheet.
Now, you are ready to begin by tracking your money for one month. This means write down every single thing that you spend money on including the candy bar for you and milk money for your child. If one month is daunting, cut back to two weeks or even one week. The point is to get a good picture of where you spend money.
Now, look at your credit card statements and checkbook for the past year. You need to find expenses that occur on a monthly basis and periodically. For example, you may only pay your car insurance every six months or property taxes every year. For each expense, add what you have spent on that item together and divide by the number of times the expense occurred, for example, by twelve for monthly expenses or by two for expenses that occur every six months. This will give you an average spent on the expense. You will use this figure to create your budget.Once you have your list, you need to categorize all of the expenses. If you like detail, you may want to break your categories into subcategories. For example, you could have a category called food broken down into groceries, lunches, and dining out. If you prefer the big picture view, you might just use the main category of food. This might keep you from tracking down all of the ways that you could be saving money. Conversely, tracking one hundred budget categories could get very time consuming and cause you to abandon your budget.
You will probably end up with some one-time expenses or minor expenses that don't seem to be worth categorizing. For these, you could have a miscellaneous category for unexpected minor expenses. You might also want to have a cash category where you allot yourself a little mad money for which you don't have to track every purchase made with it.
Include categories for expenses that are anticipated but that you haven't yet spend money on. For example, if you have a house, include a home repair expense. Even if nothing has broken yet, it will someday, and then you will be prepared. If your car is on its last legs, make sure to have a category for car savings so that you will have a little saved toward the down payment on another vehicle.
Once you have all of your categories listed with the amount that you think you will need for each category, add up the amounts to get the total. Don't panic if this total is more than your income. This is common!
Your next task is to find categories that can be trimmed in order to make your monthly budget total equal your monthly income. Do not cut out the categories you just made for anticipated expenses like home repairs. These expenditures will crop up, and you will need money to cover them. Instead, look at your discretionary spending categories and make cuts. Continue until your budget total is equal to your income total.
Congratulations! You now have a personal budget. You are ready to put your plan into action.
