Creating a Single Mom (or Single Dad) Budget: 10 Tips for Financial Success
Raising a child — or children — is an incredibly rewarding experience.
It can also be a very expensive one — and doing it alone can be a major source of financial stress.
Being a single parent means you have to become a pro at making your money stretch and saving money by establishing your own financial safety net.
What Is the Average Budget for a Single Mom?
The typical monthly budget for a single mom is a tricky financial situation. Single mothers earn significantly less than married couples or single fathers. According to the U.S. Census Bureau, single-mother households comprise 80% of single-parent households in the United States, with a median income of $51,168.
While many newly single moms might receive child support, it does little to ease a tight budget or ensure long-term financial freedom. According to a 2020 report from the U.S. Census Bureau, the minimum payments for child support average $286 per month.
In many states, the average cost of child care can take up 40% or more of the single-parent budgeting for basic living expenses. And that’s long before we consider the cost of health insurance or other insurance premiums.
Between the financial burden of child care and the everyday expenses of raising a child, it’s clear that one-income households have to run a tight ship to stay debt-free and achieve financial security.
We spoke with three financial professionals — who have personally experienced life as a single parent — to get the best tips on how to budget and save money when raising children alone.
10 Money Management Tips for Single Parents
These strategies and advice will help you create a workable single mom budget (or single dad budget).
1. Know Your Cash Flow
First things first — you’ve got to know how much money is coming into your household and how much is going out. This is especially important if you recently separated from or lost a partner who used to handle all the finances.
“The first thing (to do) is to face the reality of the situation,” said Molly Ward, a certified financial planner with Equitable Advisors and a single mom of three. “Knowing that you really have little and that things are tight isn’t as scary as not knowing (where you stand financially).”
If you don’t have awareness of your cash flow, you could end up easily spending more than you make. Ward recommends establishing a regular time — weekly or monthly — where you sit down and review your finances.
You can also check past bank statements to get a better idea of money habits you might have. Don’t just focus on your spending. Make sure you’re clear on your sources of income, including any child support or alimony.
These budgeting apps can help you track expenses and make sure more money finds its way into your savings accounts.
2. Create a Values-Based Budget
“Once you know where your money is going, it’s time to make hard decisions,” said Kumiko Love, an accredited financial counselor and founder of The Budget Mom. “Is your spending honoring you and what you want to accomplish?”
Your budget should reflect what you value most. For example, if you really want to live in a sought-after school district, you might spend more on housing or be willing to move to a smaller home. Or perhaps having your kids participate in certain extracurricular activities is worth more to you than having a big cable package with hundreds of channels.
Lakisha Simmons, a financial coach and author of “The Unlikely AchieveHer” workbook, said after divorcing her sons’ father, she went through her budget and cut out expenses that didn’t align with her goals of spending more time with her kids and traveling with them.
“I started to think: Does this choice that I’m making, do I value it or is there a different decision that I would value more or a different experience I would value more?” Simmons said.
Learn more about how to create a values-based budget.
3. Use a Cash Envelope System
Creating a budget is essential — but only if you’re able to stick to that budget.
Implementing a cash envelope system can help.
“I am a huge advocate of the cash envelope method,” Love said. “With this method, you determine a budget for different variable spending categories, like clothing, gas, food, etc. Once you have your budget limits figured out, you then pull out cash for each category and that’s what you have to spend until your next paycheck.”
This budgeting approach prohibits you from sabotaging your financial plan by swiping your debit or credit card past your self-imposed spending limits.
4. Slash Spending
After reviewing your cash flow and creating a budget that honors your values and financial goals, you’ll likely be able to identify expenses that you can reduce or eliminate. Here are a few budgeting tips to help you find and cut back on discretionary spending.
Look at Nonessential Expenses First
Lean Into Coupons and Discounts
Save money by using promo codes and coupons. Be careful not to overspend in an attempt to compensate for what you feel like your kids might be lacking from living in a single-parent household.
“There are all kinds of justifications for spending, which could blow the budget up,” Ward said.
She said one of her favorite ways to save money is to ask businesses if they offer a single-parent discount, even if it’s not advertised.
“If I have a repair person come to my house or anything that’s negotiable, I will say: Do you give discounts to single moms?” Ward said. “And a lot of times, (they’ll say) yes. You don’t know until you ask.”
Find a New Provider
Another approach to cutting expenses is to examine your essential bills — like your rent or mortgage, your phone bill and your utility bills — to see if there are less expensive service providers or other options.
Find extra money in your budget by negotiating your way into a lower cable bill.
To obtain financial freedom, you may need to put a financial goal like homeownership on the back burner. For Simmons, that meant selling her five-bedroom house and downsizing to a small two-bedroom apartment.
“I could have stayed in the house, but I would not have been able to save, and I would have continued to feel stressed,” she said.
Simmons said she was able to shave $1,000 off her monthly expenses by moving.
Focus on Lowering Child Care Costs
Employer-based child care benefits and flexible spending accounts are other ways you can save money on child care.
5. Prioritize Savings
With only one income to rely on, single parents need to have an adequate emergency fund — at least three to six months’ worth of expenses.
“It will help to alleviate some of the stress that single parents feel,” Simmons said.
Here are a few proven strategies for saving regularly:
- Pay yourself first. Set aside money when you first get paid rather than hoping you have money left over at the end of the month to save.
- Automate your savings. Adjust your direct deposit so that a percentage of your paychecks goes to your savings account. That way, you’re saving extra money without even thinking about it.
- Start a sinking fund. Besides your emergency fund, you might want to have sinking funds to break up big expenses like family vacations, summer camp tuition and holiday gifts.
- Consider a college education savings account. To save up for your child’s future college education, consider setting up a 529 college savings plan and scheduling automatic transfers into that account each month.
- Focus on eliminating debt. Having debt, especially high-interest consumer debt, can make it difficult to save money. Try the debt snowball method to tackle your lowest balance card (or your smallest debt) first. If you have multiple credit cards with high interest charges, here are 11 tips to pay off credit card debt fast.
6. Protect Your Wealth
As a single parent, it’s essential to have a plan in place in case you aren’t able to bring in income or care for your child.
“You could have your emergency savings built up, but if you lost your job due to an illness or a disability, that emergency savings is only going to last so long,” Ward said. If you’re solely responsible for children, here are three ways you should start planning ahead to ensure their financial success and stability.
Consider Disability Insurance
Disability insurance pays you a portion of your salary if you get injured or suffer a medical condition that prevents you from working. If you’re an older parent, you might want to think about long-term care insurance, which can defray the costs of a home health aide or home modifications, like building a ramp for a wheelchair.
Get Life Insurance
Having life insurance can provide funds for a relative or another trusted individual to raise your children in the event of your death. It’s also vital to have a will that names whom you’d want to be their guardian.
See which life insurance companies we recommend based on financial strength and customer satisfaction.
Do Estate Planning
“When the burden of building a future you want for yourself and your child falls solely on your shoulders, identifying how you want your wealth distributed and managed if you are no longer living is important,” Love said. “You can dictate how your wealth will be transferred to your child and how those resources will be used.”
7. Don’t Forget to Invest for Your Future
Retirement may feel so far away, but it’s never too early to save. In fact, the earlier you save up for retirement, the better chance you have for your money to really grow thanks to the power of compound interest.
If you don’t have much room in your budget, it’s OK to start small.
Simmons said she started with meeting the company match for her workplace retirement account and then increased her contribution amounts over time.
“Eventually, I got to the point where I was investing 60% of my gross income,” she said.
Simmons’ focus on investing led her to retire from her career as a tenured college professor by age 41.
“I really encourage single parents to spend time learning how the stock market works, spend time learning the differences in the types of accounts that you can invest in,” she said.
Learn more about how single parents can save for retirement.
8. Establish a Positive Money Mindset
It may be easy to fall into the trap of focusing on what you lack as a single parent. But it’s beneficial to maintain a positive money mindset.
“Believe in yourself,” Simmons said. “Know that you are worthy of being wealthy.”
A positive money mindset won’t magically solve all your financial problems, but it’ll help you recognize your potential to reach your financial goals. A negative mindset, on the other hand, can hold you back subconsciously.
“The moment that you accept that you can do it and it’s possible for you, no matter where you are today, the future is yours and you can do it,” Simmons said. “You just have to start taking steps to get there.”
9. Partner With a Financial Counselor
One of the struggles of single parenting is not having a partner to bounce ideas off of or to help make big decisions.
To make up for that, Ward said it can be helpful to meet with a financial planner or money counselor.
While you’ll ultimately be making all the decisions, it can be helpful to discuss the pros and cons of big financial choices — like buying a house or saving for your kid’s college education — with a professional.
10. Teach Your Children How to Be Successful With Money
It’s not enough to just get your financial house in order. Teaching your kids how to earn, save and grow money will set themselves up for a prosperous financial future.
“I teach my children to create their own income,” Simmons said. “I’m teaching them to be creators and not consumers.”
She assisted her 11-year-old son in writing and publishing a children’s book about divorce. She also helps him invest the income he earns.
Love said she involves her son in her family’s finances by sharing the ups and the downs with him.
“I don’t just share with my son all of the success and accomplishments with my money,” she said. “I also share the struggle and hard decisions. I believe this will help my son learn not only how to navigate the good times, but also the bad times.”
Building a Single Mom (Or Single Dad) Budget Starts With a Realistic Plan
The reality is that most one-income households are low-income households that don’t have disposable income to spare. Prioritizing spending time with your kids can ease worries about being unable to afford trips to amusement parks or the latest kicks during back-to-school shopping. When your kids grow up, they won’t remember your net worth. They’ll remember the moments you chose to invest your time in their happiness and well-being.
Nicole Dow is a former senior writer at The Penny Hoarder. Kaz Weida is a senior staff writer at The Penny Hoarder.