financial-planning-for-single-parents

3 Financial Tips for Single Parents

In Financial Planning Tips by Inunison

Creating a Budget

First, you need to create a budget. I know what you’re thinking, but before you can even dream about saving money you have to know where your money is going. How can you decide where to make cuts or find extra cash to save if you have no idea where all of your money is going? You can’t. So, it’s time to create a budget.

How much is being spent on housing, utilities, groceries, debt, and entertainment? Once you have created a clear picture of where your money goes in a typical month you can begin to spot trends and problem areas.

After you’ve found the problem areas you’ll have a better idea of where you can cut back and by how much. Then you can use that money to apply to your savings. We have budgeting programs to assist you with setting up your budgeting requirements.

Emergency Fund

After you’ve identified where your money is going you should have a few spare dollars to put aside into your savings.

You need to think of your savings just like you would any other bill. When your electric bill comes each month what do you do? You make sure it gets paid, right? That’s how you need to treat your savings account. If your goal is to save $100 a month then think of that as a $100 bill that needs to be paid. If you are thinking about this in terms of a bill you’re more likely to make that deposit and build up your emergency fund.

Just thinking about your monthly savings as a bill isn’t enough, and that’s where you have to pay yourself first. You need to create an automatic savings plan that will automatically deposit money into your savings account before you even have a chance to spend it. This can be done right through your employer’s direct deposit or with a recurring transfer with your bank. And just like magic, you don’t even miss the money going into savings each week, yet your savings account begins growing over time. We can help you set this up with access to our software programs.

Spend Less than You Earn

This is the holy grail of personal finance, but if you can’t utilize this secret you’ll never be able to save money. You simply have to spend less money than you earn and there’s no way around that. It’s all about cash flow.

If you earn $100 and spend $110 you’re now at a -$10. Where does that extra ten dollars come from? Usually it’s borrowed money, either from a credit card or some sort of loan.

If you didn’t already know, borrowed money comes with interest. That means you’re actually more than ten dollars in the hole. As you begin to do this on a regular basis month after month and with large dollar amounts it’s easy to see how someone can get tens of thousands of dollars in debt, which is exactly why most people feel as if they don’t have any money to save.

As this debt mounts you may find yourself just making the minimum payments each month, but that in turn just means you’ll be spending the next ten or twenty years paying for something you couldn’t afford, spending thousands on interest.

If you currently have credit card debt this is something we can help you reduce before starting your savings plan journey.