A budget is a systematic plan for the expenditure of a usually fixed resource, such as money or time, during a given period. As a single mother you might groan at the thought of putting together a household budget with all your expenses, but its easy to do and will also help you become very financially organized.
Shaping up your finances is particularly important if you are experiencing a life altering experience such as a marriage, divorce, new baby or any other event that changes your finances dramatically. Whatever the state of your financial life, developing a sensible household budget will allow you to be in charge of your money.
How to Create a Simple Budget
Your Cash Flow
The core of budgeting is for you, as a single mother, to see your monthly spending needs and habits. The purpose of a household budget allows you to track your personal cash flow. Your personal cash flow is how much money comes in and how much goes out.
Adding up your monthly income is easy, but totaling up all your expenses takes a little more effort.
First, collect all your bills, your credit card statements, your checkbook register and receipts for your groceries, gas or anything you buy with cash.
If you haven't been keeping good records, you may have to get a receipt of every dollar you spend for a month before you put together an accurate budget. Track your expenses by making entries in a notebook or learn how to in Microsoft Excel. You can also use a money management program such as Quicken or Microsoft Money. They are really worth the investment because it makes the budgeting process easy and can often be found discounted at computer retailers or bookstores.
Now divide your spending into fixed costs and variable costs. Your fixed costs will include such things as mortgage payments, rent or loan payments. Your variable costs will include such things as clothing, food and entertainment.
How to Stick to a Budget
Once you are managing your spending, you can easily decide which costs as a single mother you can cut and which you cannot. In most cases as soon as you see how much you are spending on your morning latte and breakfast item, you will be motivated to cut back. Stay motivated by setting goals.
Here are a few budgeting tips to get you started:
- Budgeting isn't difficult, but getting started does take motivation. Promise yourself a reward for your efforts.
- Gather three months of bills or, if possible, all of the past year's bills, and add up how much you spend every month. Divide them into categories such as housing, entertainment and food.
- Take a good look at what you can spare. Entertainment expenses are easy to cut, but utility bills are not. Keep a daily journal of what you spend each day. This may sound obsessive, but it can be helpful. Once you know where your money goes, you can spot your unnecessary costs. It is really not that hard to give up lattes or bring your lunch from home.
- Pay bills as soon as they come in. Avoid destroying your budget with late fees.
- Decide what you can cut, and then cut it out. Track what you are saving, and you will be pleased with the results.
