How to create a budget and get out of debt as a single mom

Tired of reaching the end of the month, wondering where in the world all your money went?

Have some big financial goals you're trying to reach — buy or refinance a house, pay off the car, get rid of debt, save for a vacation, help your kids pay for college?

What about just creating a more mindful, thoughtful daily routine with your money — so you can splurge on small things without guilt, while also meeting your goals and monthly budget?

Yep, time to keep track of your money. Time to start a budget, babe!

MoneyPatrol budget app lets you see all your accounts, understand spending and debt, set goals and keeps you on track with alerts >>

And no, it’s probably not as bad as you think. Tracking your spending and planning your spending may sound like a nightmare, but I promise you’ll love the results.

No matter how much you earn, your budget doesn’t have to be overly restrictive, nor does it have to suck the joy out of your life. Ideally, you’ll create a household budget that covers all your bills, reduces waste, and leaves room for fun.

If you are ready to level-up your finances but know you need help keeping track of where your money goes, your budget could be your best friend.

Here’s how to get started budgeting your money…

Learn about common budgeting methods

First off, it’s important to know there are many different budgeting strategies.

50-30-20 budgeting method for money

For example, some experts suggest using a 50-30-20 method of budgeting that asks you to spend:

  • 50% of your money on bills
  • 30% on wants
  • 20% on savings (in a high-interest savings account)

Here is how it works:

  1. Total up your income, after taxes and benefits (more on what qualifies as income below)
  2. Total up your basic bills. These include:
    • Housing (rent or mortgage)
    • Utilities
    • Groceries
    • Insurances: Health, life, car, home, disability
    • Car payments and related expenses
    • Debt payments
    • Daycare
    • Phone
  3. Make sure that your bills do not add up to more than 50% of your take-home pay.
  4. If they do add up to more than 50% of your income:
  5. Now, of your budget, 20% goes to savings. This includes an IRA, 401(k) from your employer (or self-employed 401(k) like I have), or a cash emergency fund in the bank.
  6. The remaining 30% of your income can now go to fun: clothes, vacations, home decor and renovations, gifts, events and experiences with the kids, dates, restaurants.

If you're on a tight budget and can’t afford to spend 30% of your money on fun, and not ready for 20% savings, this is not your budget. And that is OK!

My favorite budgeting strategy is “zero-sum budgeting.”

Zero-sum budgeting method

This type of budget requires you to spend every dollar you each month. To make the most of your money, however, you’ll pay your savings and investments as if they were regular bills. This forces you to “pay yourself first” while also reducing waste, so it’s a win-win.

Creating a zero-sum budget takes some time and patience, but it’s not overly difficult.

Cash envelope system

Another popular budgeting method is the cash envelope system, in which you establish your monthly budget, and put the relevant sums of paper cash money in actual paper envelopes. For example, if you budget $800 for groceries for the month, you put $800 cash in an envelope, and allow yourself to pay for food out of that envelope only.

This method works for many people because it removes the temptation to put expenses on a credit card, or overdraft your checking account with a debit card.

How to choose a budgeting method

The only wrong budgeting method is one you don't stick to. In other words, try different methods, play with various budgeting and money apps, and figure out what habits resonate with you, your money weaknesses, and a method that will help you reach your financial goals.

5 steps for how to set up a budget

Here are the steps you can take to create a single mom budget you can stick to:

1. Track how much money you spend for a few months.

The first step to creating a budget that works is figuring out where all your money has been going each month. To do this, you’ll want to break out your last few months of bank statements and credit card bills. MoneyPatrol is a budgeting app that automatically pulls in transactions from all your accounts to help you create and stick to a budget. Check out MoneyPatrol for free >>

Devote a few hours to adding up all your spending in categories like food, entertainment, transportation, clothing, and regular bills on a per-month basis for the last few months. If it’s currently August, for example, figure out exactly how much you spend on food and dining out in June and July. And do the same thing when it comes to what you spent in other categories that tend to hit your budget hard.

Tally those numbers up to get an idea of how much you’re spending each month! You’ll need this information once you get to the point where you’re creating your budget for future months.

2. Figure out exactly how much money you earn

Next up, figure out exactly how much money you bring home each month. This should be easy if you earn a salary but may prove more difficult if you’re paid hourly or rely on a lot of overtime. Income includes:

  • Salary
  • Overtime
  • Tips
  • Bonuses
  • Side gigs
  • Child support
  • Alimony
  • Benefits like housing allowance or food stamps

If you can’t figure out exactly how much you earn, try to come up with a minimum amount of money you earn in any given month. If you sometimes have 5 weekly paychecks in a month but usually just 4, for example, create your budget based on four pay periods. Or, if you sometimes earn extra commissions but not always, plan your budget based on your lowest income months. If you happen to earn more in any given month, you can treat it as “extra” money and allocate it toward debt repayment or savings this month or next.

3. Look for ways to cut spending

Now that you know how much you earn (or approximately how much you earn) and how much you’re spending each month, it’s crucial to look for areas to cut. Maybe you found out you’re spending $500 or more on dining out each month and know you could easily cut that in half with a little meal planning. Or perhaps tracking your spending helped you realize you’re spending way too much on clothes for the kids or yourself.

Bill negotiation services are a quick, free way to identify and cancel recurring subscriptions you no long need or want, and lower your monthly utility bills. For example, Truebill will negotiate better deals for more than two dozen kinds of services, including Amazon, Netflix, Hulu, Time Warner cable, Audible, Spotify, gym memberships, insurance policies and internet. Truebill saved me $16 off my AT&T bill and got me a better plan, to boot. The app also saved me $23.20 per month on my TimeWarner/Spectrum Internet plan.

Whatever your splurges, your budget will thank you if you can find a way to rein at least some of them in.

4. Allocate all the money you earn on paper at the beginning of the month

At this point, you should be fully aware of your income, your spending weaknesses, and how your current spending might be impeding your ability to save. With those details in mind, it’s time to sit down and create a monthly budget for the following month.

If you want to create your budget on paper, the process is fairly simple. All you have to do is create two different columns — one for each bill or estimated expense and another for how much it costs. At the top of the page, also list your monthly take-home pay so you can reference it when you need to.

Start at the top of the page by listing all your regular recurring bills you have to pay — bills like your rent or mortgage, utilities, car payments, and insurance. (Later on we’ll talk about ways you can reduce the amounts of those recurring bills, with help from apps like Truebill and Trim.)

Then, create a list of estimated expenses you’ll need to cover for the month — for example, how much you plan to spend on food and dining out, gas to get to work, and entertainment for the month.

Keep an ongoing tally of how much these add up to, then see what’s left. At this point, you’ll want to allocate any additional funds to savings, investments, and debt repayment.

If you’re unsure how much money to save, that’s totally normal. Keep in mind that, if you have high-interest credit card debt, you’ll want to allocate as much of your income as you can toward debt while also saving for the future. Considering the average credit card interest rate is well over 17%, any credit card debt you have should probably be tackled first.

First, see if you qualify for a 0% balance transfer credit card — which could save you thousands of dollars in interest and help you pay off debt much faster.

Here is my step-by-step guide to paying off debt — for good

Here’s how a monthly zero-sum budget might look for someone that brings home a total of $7,000 per month after taxes and 401(k) contributions:

Monthly Income: $7,000

BillsAmount budgeted
Mortgage payment$1,550
Car Payment$480
Groceries and dining out$700 (estimated)
Car Insurance$150
Utility bills (electric, gas, and water bill)$400 (estimated)
Dance lessons$250
Piano lessons$140
Clothing$200
Credit Card #1$400
Credit Card #2$250
Credit Card #3$1,000
Savings$1,480
Total budget amount$7,000

5. Pay all your bills and expenses until your income is gone, then start the process over.

Keep in mind that the example budget above is just that — an example. Your budget may look totally different depending on how much you earn, how many kids you have, and other variables.

The key is making sure you list all your bills and fluctuating expenses along with savings and investments each month. Spend every dollar you earn “on paper” and make sure to pay yourself first.

Get started budgeting money with MoneyPatrol, free >>

As the month goes on and you get paid, pay bills and expenses according to your budget and check each of them off as you go. When it comes to estimated expenses like food and transportation, you’ll need to track those categories throughout the month to ensure you’re staying on track with your spending goals.

At the end of the month, you’ll see how you did, and have the opportunity to tweak your monthly budget so it works a little better the following month.

Remember: This is an art and a science, and no one is perfect. Bills fluctuate, expenses come up unexpectedly, and income can go up and down. Be kind to yourself, but also realize that the stricter you are with your budget, the more joy and freedom it will ultimately afford you.

Budget money apps and a Google Sheets budget template that can help

While the process above doesn’t require any tools or software, there are plenty of apps and free or low-cost services you can use to make budgeting easier. Here are the ones we recommend:

MoneyPatrol review

What is Money Patrol?

MoneyPatrol: This budgeting app pulls in all your bank info to help you understand how you spend your money.

How MoneyPatrol works

After you create an account, add all your bank accounts. You can create budgets and goals, and set up alerts so that the app pings you when you over-spend or otherwise misstep.

How much does MoneyPatrol cost?

MoneyPatrol offers a free 15-day trial. After that, it costs $7/mo, billed annually at $84.

Truebill review

What is Truebill?

Truebill: Truebill is another free budgeting app that helps you lower your expenses, manage your money, let you see your savings and investment accounts in one place, and search the Internet for new ways to save on essentials and nice-to-haves.

How does TrueBill work?

This app will negotiate better deals for more than two dozen kinds of services, including Amazon, Netflix, Hulu, Time Warner cable, Audible, Spotify, gym memberships, insurance policies and internet. Truebill corrals all your subscriptions into one place, so you can decide which ones no longer spark joy – at which point the app will cancel them for you. As for the ones you want to keep, Truebill will work to negotiate better deals.

Truebill saved me $16 off my AT&T bill and got me a better plan, to boot. The app also saved me $23.20 per month on my TimeWarner/Spectrum Internet plan.

How much does Truebill cost?

TrueBill charges you 25% of any savings. They don't make money unless they save you money

Tiller review

What is Tiller Money?

Tiller: This budgeting spreadsheet app promises to help you manage your monthly cash flow while sticking to a preset spending plan — all within a spreadsheet from Excel or Google.

How Tiller Money works

With Tiller, you can monitor your spending all in one place, work up a realistic monthly budget, and track your net worth.

How much Tiller Money costs

After the 30-day free trial, Tiller costs $5 per month.

The bottom line

If you’re tired of wondering where your money goes every month, the time to give budgeting a try is now. Maybe a budget is exactly what you need to start paying down debt and reaching your financial goals.

About Emma Johnson

Wealthysinglemommy.com founder  Emma Johnson is an award-winning business journalist, activist and author. A former Associated Press reporter and MSN Money columnist, Emma has appeared on CNBC, New York Times, Wall Street Journal, NPR, TIME, The Doctors, MONEY, O, The Oprah Magazine. Winner of Parents magazine’s “Best of the Web” and a New York Observer “Most Eligible New Yorker," her #1 bestseller, The Kickass Single Mom (Penguin), was a New York Post Must Read. A popular speaker, Emma presented at the United Nations Summit for Gender Equality. Emma's Top Single Mom Resources.

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  1. How to create a single mom budget you will stick to | The Next Chapter on April 24, 2019 at 4:47 pm

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