GOBankingRates

Budgeting Tips for Single Moms

Katie Harp / Unsplash

GOBankingRates wants to empower women to take control of their finances. According to the latest stats, women hold $72 billion in private wealth — but fewer women than men consider themselves to be in “good” or “excellent” financial shape. Women are less likely to be investing and are more likely to have debt, and women are still being paid less than men overall. Our “Financially Savvy Female” column will explore the reasons behind these inequities and provide solutions to change them. We believe financial equality begins with financial literacy, so we’re providing tools and tips for women, by women to take control of their money and help them live a richer life.

Keep Up With the Latest: Sign Up for The Financially Savvy Female Newsletter
Stay in the Know: Read More From the Financially Savvy Female

Today’s column was inspired by one of our readers who asked, “What’s a good budget plan for a single mother of two girls?” To help this reader out, we spoke with Gina Grippo-Martinez, a wealth advisor with ALINE Wealth. Grippo-Martinez is a mom herself who has worked with single-parent clients, and she shared her insights on how to create a realistic budget as a single mom.

Make Your Money Work for You

Helpful: How To Navigate Your Finances If You’re Newly Single or Divorced
Read: Money-Saving Expert Says These Are the 4 Tips Every Mom Needs To Know

What budget items should be included in a single mom’s budget?

All expenses for herself and her family that she is responsible for. First come the bare necessities. This includes personal and family expenses — groceries, child care, healthcare, cell phones and laptops, pet care, personal care items, clothing, car payments and gas; and home expenses — mortgage, taxes, homeowner’s insurance, cable, electricity, internet and gas/oil, to name a few. Leave room in your budget for extras such as entertainment, a vacation fund and charitable donations. As a single parent, consider closely examining insurance options. These include life, disability, long-term care, medical and umbrella insurance. Lastly, don’t forget to prepare for emergencies. Put away a little per month for an emergency fund. You want to have six months of expenses covered just in case.

Make Your Money Work for You

Check Out: 4 Essential Tips for Moms Re-Entering the Workforce

How should a single mom balance covering expenses now with saving for her kids’ future and her own future? What should she prioritize?

The bare necessities must come first. That means prioritizing housing expenses, groceries, child care and healthcare.

To save for the future, she can contribute to her retirement plan at work. Every little bit will help, and the time value of money and compound interest mean saving early and often pays off. At the very least, she should do her best to contribute enough to receive her employer’s match, if offered. This is essentially free money. She should try setting contributions to automatically increase by 1% annually.

More: How To Handle the Financial Pressure of Being the Sole Breadwinner

To save for her kids, she can open 529 accounts. Several states offer tax deductions on contributions to these accounts. When her children receive monetary gifts for birthdays, holidays and graduations, deposit these funds in their 529 accounts. She can also set up monthly contributions to be automatically deducted from her checking account and deposited into the 529s. Again, every little bit helps, and the earlier you start the better. Challenge yourself to increase the contributions by 1% annually.

Make Your Money Work for You

Starting early for retirement and education savings is the best way to take advantage of compounding returns and prepare yourself for the future. Don’t forget that student loans are available for college, but your retirement cannot be financed. Discuss the benefits of state schools over private schools before your kids take on thousands in student debt.

More Help: 3 Alarming Ways Women Are Lagging Behind Men When It Comes to Their Finances

What are some tips for making ends meet as a parent on a single income?

Learning to be thrifty is a must. Look for fun inexpensive activities like your town’s local street fairs, festivals and the beach. Take advantage of free resources offered by your local libraries such as classes, events and passes to local museums. Pack picnic lunches and try not to eat out a lot for dinner. Make meals fun at home, like Taco Tuesdays or personal pizzas with their favorite toppings. Bring breakfast and lunch to work. Have your coffee at home first as opposed to purchasing out. Most importantly, it takes a village to raise a child. Lean on friends and family for support. Everyone could use a weekend at grandma’s and your teenage neighbor would probably love to add tutoring to her college resume.

More From GOBankingRates

Last updated: Oct. 12, 2021