Saving money as a single mom is possible following these 4 methods! Be willing to stick with saving money for the long game and rewards will follow.
When I became a single parent, I didn’t know anything about saving money as a single mom. I didn’t know how I’d make ends meet each month much less actually save money. But I’ve been debt-free for years now, except for my house, which is debatable as a “good” loan to have.
So, what is the key to saving money as a single mom?
Still today, I use four basic methods.
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- Auto Pay for Fixed Expenses
- Multiple Savings Accounts
- Zero Based Budgeting
- Pay Cash for Everything
Let’s dive in!
Method 1: Set up automatic payments for your fixed expenses.
Saving money as a single mom is so overwhelming especially when the bills keep coming in. One way to combat this is to have the necessities auto-paid. Even though I’m debt free today, I still follow this approach for a couple reasons:
- You never see this money, so you can’t spend it. Once your paycheck is deposited into your bank account, this money is either set aside into another sub-account or the bills are automatically paid.
- You don’t have to worry about paying these necessary bills, so your bills are never late and thus you never have late fees. It can be so overwhelming as a single parent to have to do all the things that having your bills on autopilot is so handy I can’t stress this enough.
Here are the bills you should have on auto-pay. These are your fixed expenses, you can’t live without them. Why not have them paid automatically and forget about them?
- House payment. This can easily be drafted by your bank.
Bonus: Make an extra house payment each year without even realizing it. When I was paid bi-weekly it was just as easy for me to have half of my house payment moved to a separate savings account as soon as my paycheck was deposited. Then my house payment was automatically withdrawn from that savings account, not my checking account. Your bank can easily set this up for you.
2. Gas, Electric, Water, Trash, House Alarm, Cell Phone, Charity. These can all be set up to be paid either through your checking account or through a credit card. Check out which one makes sense for you.
>Sometimes there are fees if you set it up by credit card.
>If you have credit card debt and cannot pay your credit card off completely each month, do not go this route. I pay off my credit card each month, no exceptions.
>One advantage of setting these bills up through your credit card is your bill is due just once during the month for all your bills. You can pay the full amount at the end of the month after you have two paychecks deposited.
>Another advantage of setting your bills onto your credit card is most credit cards have a cash back program so you earn points or money back just for paying your bills through them.
Method 2: Set up multiple savings accounts
Most banks will allow you to have as many savings accounts as you want with as little as $5 as the balance. Separate savings accounts is a great way to keep saving money as a single mom for variable expenses as well.
- House payment. As mentioned earlier I have one for my house payment. I never look at this one. It is automatic and I can never touch it because I can never be without a home!
- Escrow Account. Have a certain amount of money automatically transferred into this savings account each pay period for the escrow on my home. Escrow is your house insurance and your real estate taxes. It is cheaper for you, in the long run, to not roll these up in your home loan. If you do, then you will pay more on your loan in interest. However, you must qualify with your lender and you are responsible for lump sum payments each year for these two bills so make certain you do not touch this money. You should weight the pros and cons.
- Christmas. Saving money as a single mom for Christmas or birthdays or any holiday can be a real struggle. But you can set aside a different savings account for anything! It doesn’t need to be much, it adds up! Check with your bank or credit union. Most offer Christmas club accounts and they mail you a check or automatically transfer the money to your checking account in November.
Method 3: Zero Based Budgeting
Okay, here’s the biggie. If you want to find your overflow, if you want to find the extra money and find out how to start saving money as a single mom, you need to learn zero-based budgeting. You don’t have to follow this exact template, it is just an example of what worked for me. But learning this concept is key!
Zero-based budgeting basically means at the beginning of each month you write down your income then all your expenses until your bottom line is zero. If you have money left over that is your savings.
Now there are apps to track all of this for you. However, I think it is good to spend a few minutes at the beginning of each month planning out your expenses and understanding your numbers. Here are some questions to ask yourself.
- Where is there a trend? Is the cell bill increasing now that your eldest child has a phone? Maybe you need to look at restricting their usage.
- Where can you cut back? Maybe groceries are higher than expected and you can try shopping at a discount store or online for a couple months to curb spontaneous shopping.
- How much are you saving or paying towards your debt? Maybe it’s more than you thought. It can be encouraging and empowering to take charge of your money and not turn a blind eye because you don’t know what is happening.
- Now that I am on one income, where are my opportunities to begin saving money as a single mom? Where can I trim expenses? Do I really need the cable bill?
Here is an example of the spreadsheet I used for 10 years and how I used the spreadsheet.
Get a copy of my spreadsheet from the resource library and modify for yourself!
It is split into 2 Pay Periods. Feel free to modify this for more pay periods and add all the expenses you can think of.
First, enter your fixed expenses in the pay period you will pay for them in. The first month you do this, you may want to annotate the date your bills are due.
For example, if you will be implementing the house payment strategy from above, then you will have an equal amount in the house payment box for both pay periods.
If not, then you will have a big chunk for one pay period and nothing on the other. This means your other expenses will probably need to fall in the other pay period. Note: even if you decide not to make an additional payment each month to your house payment, you can still split up the amount you set aside so that one pay period doesn’t feel so draining. Having a separate savings account is nice for this.
If you are using your credit card to streamline your payment for anything then you will want to zero out those lines and enter the amount due in the credit card line.
Total everything in Total Expenses.
For Income, include all streams of income: main job, child support, and any side hustle jobs you may have.
Zero Bottom Line
Income should automatically subtract your expenses leaving your difference. This is not “free money”. Here is where the zero-based budgeting comes into play. And where our opportunities for saving money as a single mom come in! We want the bottom line to equal zero.
Above you should have identified all areas in your life where you need money. Those are your fixed and variable expenses. The difference or overflow goes into one of 3 places:
- Savings to build up an emergency fund. This is especially important as a single parent. We left the savings line empty earlier. You can fill this in with the remainder now.
- Pay off credit card debt. Add the remaining of this amount here. You can make more than one payment to your credit card. You don’t need to hold onto this money. Zero out your budget and apply this amount to your credit card.
- Pay additional to a car loan or any other loan you have.
If you already have these filled in and are looking good, that means you can begin to breathe. Where do you want your extra money to go?
- Children’s College Education
- Pay off your Home Loan. There are two schools of thoughts on this. Personally, I hate all kinds of debt and I strive to pay mine off.
- Additional Savings account for Vacation Fund
What if My Difference is Negative?
What if my difference is negative and I don’t have enough money for the bills much less saving money as a single mom? I understand. I was in that state for a while myself. What saved me was the principals I learned using the cash envelope system below.
Method 4: Cash Envelope System
This method is largely based on Dave Ramsey’s system and a huge boost to saving money as a single mom. When I was first trying to get out of debt and save money I exclusively used the cash envelope system. This is a popular system taught by Dave Ramsey from Financial Peace University. I highly recommend taking this course if you are struggling saving money as a single mom.
Or a more affordable option (and what I did) was read his book, “Total Money Makeover.”
Here is the basic premise:
For any expense that cannot be qualified as a fixed expense or that does not come from a company with a bill attached to it, gets its own envelope and you pay for it all using cash. This includes entertainment, groceries, gasoline, clothing, haircuts, etc.
Once you get used to this system, it is great.
In fact, I have never used an ATM in my life. I don’t even know how. Whenever I receive my PIN in the mail from the bank I shred it immediately. I don’t know my PIN number to use it at the cashier. I have no way to extract cash using my debit card.
Each pay period you withdraw the amount on your spreadsheet for groceries for example and put in the groceries envelope. You use only that much money for groceries that pay period. You don’t use the credit card because you have already looked at your full income and expenses for the month and zeroed it out. There is no more money to take from.
While going through your budget if you are short on a fixed bill, such as your house payment, it comes out of entertainment or groceries. You go without entertainment or cable for a while. Or you have less of a groceries budget that month.
On the other hand, some months aren’t so bad, and you have leftover cash in your grocery budget. When that happens, you can move that cash to your entertainment envelope.
Saving Money as a Single Mom ~ Accomplished!
Live like this for a year or two. Pay off your debt and this whole system becomes second nature. It does not feel like you are living paycheck to paycheck. Because you can see how much money you actually have, and you can see yourself winning this thing!
Once you get very comfortable with your monthly budget, begin saving money as a single mom, then it becomes easy to adapt to your own methods. You must be strict with yourself for a few years until you get everything under control.
Consider creating yearly goals to keep yourself on track. Review them each month when you sit down to look at your budget. Check out a simple goal spreadsheet here.
This post is part of a 7-month Single Moms series “Secrets of a Successful Life” by Single Mom Bloggers. Each month, multiple amazing single mom bloggers will be writing on different topics. I pray you find encouragement, acceptance, and belonging amongst these brave women!