How to Create a Budget that Works
As a single mom, a budget is the one thing that will get you from paycheck to paycheck. Unless you are a highly compensated individual, the lack of a second income in your household hurts. As a result, you need to set out a budget in order to help you plan for each financial need.
The first step towards creating a budget is gathering information. Collect your bank statements, receipts, credit card statements, and any other document that will show you how you have spent money. Once you have these documents in hand, write down all the places where you get money. Obviously you have your job, but you may also have child support payments or a second income from a work at home online job . Write all of these down.
With the documents you collected at the beginning, make a list of all of the expenses you have. Do not put money amounts with them yet, but simply categorize them. For instance, your mortgage, grocery expenses, utility bills, and money spent on clothing should all be included. Remember to put in money for savings while making this plan.
Once you have a list of expenses, decide which ones are fixed and which ones can change from month to month. The fixed expenses, such as your mortgage, are easy to plan for, but the variable expenses take a little more work. With any bills you can, get on a budget plan that will turn variable expenses into fixed. Then, guess how much you spend on average each month for the variable expenses. Write down all of the expenses.
Now you are ready to compare your income to your expenses. If you have more expenses than you have income, whittle down any unnecessary ones. Perhaps you could pack your lunch instead of eating out while at work. Maybe you could spend less on clothes each month. Remember that saving money is your priority, so look for other areas where you can make changes.
Now that you have a plan, stick to it. If you budget $100 a month for clothing, do not spend more than this. If you need a new pantsuit for work and it costs more than $100, save your clothing money for a couple of months until you have enough. Only spend the money that you have coming in, and be sure to set aside money for savings.
Finally, look over your budget each month and make changes when needed. A budget is a fluid thing, so if something is not working, make an adjustment. However, keep your budget within the parameters of what you make, and this will save you from falling too deeply into debt.
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