Budgeting is key, you need to first identify what your “exact” financial situation is and then carry out whatever changes are necessary to improve it.
Accounting for your monthly income is easy but calculating your expenses takes a bit more time and effort. Gather three months of bills, credit card statements, and receipts for your groceries, diesel, and anything you might buy with cash. If you haven’t been keeping records of expenditure, now’s the time to start. Track your expenses over a month or two by using a spreadsheet and don’t forget fixed costs such as mortgage, loans, school fees etc.
The purpose of a household budget is to track your personal cash flow by measuring how much money comes in and out. Use a spreadsheet to input your monthly income and your expenses. Some expenses might fall quarterly or annually, but it helps to break these down to a monthly cost, so you don’t miss anything. Now, you can see if you have a monthly surplus or a shortfall.
We are all guilty of spending money on things that we want but don’t necessarily need. Look through your expenses and think about the things you’re prepared to cut back on.
It’s not about taking the fun out of everything but simply asking yourself which things are important to you and which your family can do without. Another thing you can do is make small cuts on lots of different expenses so that you save money across the board.
Maybe you could reduce food expenses by planning more cost-effective but nutritious meals or shopping at cheaper supermarkets. Review your utility bills — can you switch to lower cost plans or save on household energy bills?
If something were to happen to your ability to make a living, you and your children will need a financial safety net to fall back on. You need to think about protecting yourself and your children and it’s very important to be prepared for anything that could arise by ensuring that you take out insurance cover such as income protection, life and serious illness cover.
An emergency fund is essential, this pot of money will protect you and your kids if you suddenly needed to deal with an emergency such as losing your job. This should be enough to cover at least four months of your household expenses.
Once you get your household budget in order you can start to think about regularly putting away even a small amount of money. Having a savings goal such as having education funds for your children will give you something to aim for and help you plan for the longer term.
It’s essential for single parents to make a will or update an old one to make sure your money and assets end up in the right hands if the worst happens.
There are various types of assistance available for single parents that you may be eligible for so make sure you’re aware of these by contacting the Citizens Information Office.