Bearing the expense of children, can be a difficult road for many two parent families. Children are an expensive proposition. Not with just basic needs such as clothes, shelter, and food, but with school supplies, extracurricular activities, and medical expenses as well.
When there is not enough money to make ends meet, many single parents turn to credit cards to get through the month. Without changes in lifestyle or an increase in income, this is a situation likely to end in insolvency. Decreasing expenses and/or bringing in more income is the only way to stop credit card debt from accumulating when single parents are in a cash shortfall position.
Our good friends at National Debt Relief gathered together 8 great singel-parent money management tips:
1. Create a realistic budget
Most Americans don’t have a budget or even know how to create one. Most Americans just go about spending and paying bills until they get to the end of the month. If lucky, they have enough money to get through; however, more often than not, there is a shortfall of cash, forcing them to turn to credit cards. Creating a budget is not hard, but if you don’t have experience in budgeting, there are plenty of resources online. Websites such as Mint have budgeting tools to help you.
Creating a budget means allocating your income to certain expenses and making sure that you don’t exceed that amount throughout the month. For instance, housing should represent about 30% of your income. If you are spending more than that on your home or apartment, this could be a source of your financial difficulties. By writing down all of your current obligations and comparing them to your net income, you will begin to see where you are overspending or how much income you are lacking. Until you work on budgeting, every month will be a financial mystery that could end up with you relying on credit cards to get by.
2. Pay your bills on time
Falling behind on your bills can have significant effects on your financial picture. Lenders report late payments to the credit reporting agencies, and your credit rating could suffer. In addition, lenders are not very forgiving, and they will charge stiff penalty fees for late payments. If you are consistently paying your bills after the scheduled due date, you must take some kind of action to catch up.
Sometimes, lenders will actually move your due date for you if it is falling at a time of the month that makes it difficult for you. In addition, bills such as mortgages, rent, and car loans often have the highest late payment penalties, so be especially mindful of making those payments on time. Paying late payment charges is unnecessary and uses up valuable cash you need to make other payments.
Perhaps hold a garage sale or sell some items you are not using through eBay to raise enough cash to catch up on your bills. If you can, get ahead; then, if you do have an extra expense, you will have the cash flow to cover it without relying on credit cards or having it affect your ability to make other payments on time.
3. Cut out unnecessary spending
When you sit down to work on your budget, you will have the opportunity to review all of the things you spend your money on during the month. This is the time to evaluate your spending and find ways to eliminate unnecessary expenditures. Look at bills such as your cable and phone bill to find areas you can cut down. Often, you can take 10% to 20% off your bill just by dropping services that you are not using or no longer want or need.
Scour your credit card and bank account statements for charges to eliminate, especially if they are recurring (think Netflix or Birchbox). These types of charges put a silent drain on your bank account that can add up to a substantial amount by the end of the year.
Other places to eliminate spending are in your everyday habits. Stopping for that expensive morning coffee or eating out often can have a surprising effect on your budget. Cutting out small expenditures that are insignificant to your daily life could create enough cash flow to get you back on track.
4. Get a second job
Adding additional income to your monthly cash flow is one of the better ways to close the gap and get on top of your finances. You must get yourself in a position financially to stop relying on credit cards for basic living expenses or emergencies. Adding a second job can enable you to start paying off your credit card debt, or start a savings account.
If you are going to expend the time and effort to get and work a second job, make sure you are serious about putting your finances in order. A second job, especially with children, is often taxing, both physically and emotionally. You also have to be careful of spending more because you are making more. Be sure to have a plan for how you will utilize that extra cash to improve your financial picture.
5. Pack your lunches
Eating out can be a huge drain on your finances. Even fast food, which is not ideal for your health either, can add up to quite a bit of money at the end of the month. Packing your lunch every day can save you more money than you think. Spending just $10 dollars a day, which is a modest check average, adds up to over $200 dollars a month, and this number does not include any other meals out in the evening or on weekends.
Packing your lunch will not only help you control your spending, it can also help you control your waistline. Packed lunches are cheap when compared to lunches you buy, and they can be far healthier. Planning often leads to better choices both financially and nutritionally.
6. Plan your meals
Having your meals planned out for the week will help you keep your grocery bill in check. Planning and making a list will keep you from making impulse buys and buying the thing you don’t need. Most grocery stores have a weekly flyer that offers sale items, buy-one-get-one-free (BOGOs) offers, and coupons. Start by going through the flyer and utilizing the sales to help you plan your meals. If there is an item on sale that you regularly use in preparing meals, it is OK to stock up a bit within reason. However, don’t let sale shopping affect your food budget by overspending. Once you have your meal plan and your shopping list, go through your pantry and cross off anything you already have on hand.
Once at the store, be sure to stick to your list. Don’t tempt yourself by shopping aisles that you don’t need to in order to complete your shopping list. Talk to the produce and meat managers about what’s on sale and have them direct you to the best buys. With some planning and good shopping techniques, you will save quite a bit on your monthly food spending. Having meals planned will also help curb any impulses to eat out or order in, which can be expensive.
7. Shop the thrift shops
Buying used items can save you lots of money. Learning how to bargain hunt can be one of the best ways to control your spending. Find a few good thrift shops in your area and browse them regularly. This is a particularly good place to buy children’s clothes since kids grow so fast. Often times, children’s clothes in thrift shops are like new, and you will pay pennies on the dollar compared to new.
Other items to look for in thrift stores are everyday items such as small appliances, furnishings, and kitchenware. Again, you will pay much less for these items compared to what you would pay in a department store.
Secondhand and consignment shops will pay you for items in good condition, so go through your clothes and household items and get rid of what you are not using. There are also several online outlets such as eBay and Poshmark that can help you earn money from things you are no longer using.
8. Formulate a plan to pay off your debt
It’s important that through your budgeting and financial planning you work on a plan to pay off your credit card debt. There are several ways to do this, but all of them take a high degree of determination and dedication. Many utilize the “snowball method” to conquer their credit card debt, and it is highly effective if you stick with the plan.
You start with your lowest balance and pay as much as you can each month while paying the minimums on the rest of your cards. Once you have paid off the first card, you move to the second lowest, pay as much as you can, as well as what you were paying on the first balance, while continuing to pay the minimums on the rest. This continues until you have paid off all your credit cards. It takes time but is effective.