It's just the two of you; well, three if you count the budget.
As head of the household all on your own, the only one who can create a stable financial future for you and your child is you. That's a lot of responsibility, but it's also an opportunity. You are in charge; no one else decides the best way to budget your money and create a solid financial plan.
With a few budgeting tips especially for single parents, you're on your way to creating a bright and secure future.
Set Up a Budget
Investopedia advises that a budget should be one of the first things a single parent attends to. If you're newly single and used to two incomes, this budget will look much different from ones in the past. Some, if not all expenses are likely different, and so is the total household income. If you've been single a while and are just getting your finances in order, there still may be some surprises.
Because everything is your responsibility, everything you spend should be accounted for as a real and tangible expenses. Just as rent or mortgage and utility payments come due every month, holiday and birthday presents are bought every year. Try to account for everything, which lets you plan for it.
Keep Track of Accounts
You monitor your checking and savings accounts, but also keep track of credit accounts such as mortgage, credit cards and vehicle loans. The University of Alabama says these measures to keep you informed can also help eliminate overspending. When you know what you've got, it's easier to make smart choices.
Budget software can help you keep track of accounts from all angles. You can review your checking account and see which bills are due next, all through the same platform. With mobile options, you can take that information with you anywhere.
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Learn about Tax Credits
Many single parents qualify for income-based tax credits for each child. Investopedia suggests that these credits may prove more valuable than deductions, which only reduce the amount of your taxable income. Credits reduce the dollar amount of tax that you owe. With a credit, you may get a lot more relief.
If you receive alimony, that's income according to the IRS; you'll pay taxes on it. Child support, however, it not taxable, and only one parent can claim a child as a dependent on her taxes.
Plan for the Future
Because everything rests on your shoulders, there's a lot of planning to secure your future and that of your child. Savings isn't just important, it's critical.
Every family, single-parent or otherwise, needs several months' income in savings in case of emergency, such as a lost job or long-term illness. This savings is fundamental. But your child may need braces, want a trombone or need camp registration fees, and he'll hopefully want to go to college.
Beyond an emergency savings plan, goal-based savings can help make those things happen. Saving money on one income isn't always easy. A solid budget plan can help you discover inefficient spending habits, and most people have them, which lets you take control and put that money to better use in savings. Even small changes add up monthly, and even more so as years pass.
Mint.com can help you reach financial goals. With intuitive budget software that you can use on a home computer or mobile device, you're never more than a click away from a comprehensive overview of your money and where it goes.
Sign up for a free account today, and see how Mint.com can take the worry and stress out of budgeting.