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How to set up a budget in 7 steps (from a single mom of 2)

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If you are a single mom, you don’t want to get to the end of the month and wonder where all your money went. When you learn how to budget your money, you will know the answer.

Emma’s quick take on how to set up a budget

You need to list all your income and expenses, as well as identify spending weaknesses. These are the basics of how to set up a budget. The next steps involve making a spending plan that lets you have money in the bank at the end of the month.

Also, check out our post on free printable budgets.

Ready to learn how to budget your money each month?

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!

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.

Here’s how to set up a budget in 7 steps:

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.

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. There are tools you could use to help you:

– Website and app
– Available on iOS and Android
– All accounts in one place
– Helps you find ways to save money and meet goals
– Annual and monthly plans available
– No ads
– Safe and secure app
30 day free trial >>
– Website and app
– Available on iOS and Android
– Educational content on personal finance
– Calculates net worth
– Helps you find extra money to pay off debt
– Categorizes spending and tracks your spending habits
– No ads
– Safe and secure app
Free 34-day trial >>
– Many low-cost options to choose from
– Better if you prefer a pen to paper approach
Shop on Amazon >>

Simplifi review

Simplifi by Quicken is a financial management website and app (iOS and Android) run by Quicken Inc., which was previously owned by Intuit (Quickbooks, Quicken Loans, TurboTax).

Simplifi offers an ad-free experience and allows its users to:

  • View all bank accounts, loans, credit cards, and investments in one place
  • Track and limit spending
  • Set financial goals

Simplifi has two payment options (though you can start with a free 30-day trial):

  • $5.99/month
  • $2.99/month billed annually at $35.99

All personal and financial data in Simplifi is protected using 256-bit encryption.

Try Simplifi free for 30 days >>

YNAB review

You Need A Budget, aka YNAB, is an award-winning app/software that makes budgets, paying off debt and reaching goals eqasy. Claims to save users an average of $600 per month, or $6,000 per year, and a 34-day free trial, YNAB is a leader among budgeting apps. 

  • BBB A+ rating
  • Highly secure site and app
  • 34-day free trial
  • 100+ free video lessons on personal finance 
  • Add your spouse, partner, kids or other to budget together

What YNAB does:

  • Securely links your accounts and imports transactions automatically
  • Helps you prioritize and categorize spending and create savings goals
  • Loan planner tool helps you find more money to pay off your debt and save money on interest
  • Displays your estimated net worth over time
  • Reconciliation makes sure your bank account and budget match

Price: $11.99/mo or $84/year. 

Get started with your free 34-day YNAB trial now >>

Budget planners

A basic planner can be enormously helpful in keeping you on track with your budgeting goals. Here are some bestsellers on Amazon:

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. Figure out exactly how much money you owe

I suggest using a nice third-party app like Mint or YNAB that will pull in all your accounts, including credit cards, saving and checking accounts, car notes, student loans, mortgages and even personal loans into one place.

Be honest with yourself and add ALL your accounts! No cheating! These apps will give you a snapshot of what is coming in, what is going out and the real figure of your DEBT.

4. 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, especially during times of economic uncertainty, like a recession. 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.

Compare rates among different companies for auto insurance, life insurance, homeowner’s insurance, and other insurance products you buy.

How to prepare for a recession and survive in 2023 — 9 things to do now

5. 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.)

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.

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
Credit Card #1$400
Credit Card #2$250
Credit Card #3$1,000
Total budget amount$7,000

Where to get free Christmas and holiday gifts for low-income families.

6. On paper, pay all your bills and expenses until your income is gone.

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.” 

Get started with your free 34-day YNAB trial now >>

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.

Why you can't afford to do your laundry — and how to outsource it for cheap

7. Paying yourself first

“Pay yourself first” means that you prioritize your financial security and long-term goals before your whims and short-term goals. 

I elaborate on the basics of investing to build wealth and having a basic savings account for unforeseen expenses. It is also important to model good financial habits for your kids — you can learn and reach goals together.

Savings rates are super-high now, with many accounts offering close to 4% APR:

But the importance of paying yourself first, prioritizing your financial wellbeing above new clothes, a home reno or fancy car, is really about establishing good habits and a foundation of security from which you can build any life you can dream of.

Single mom budget FAQs

What does a budget do for single moms like me?

A budget is an important part of understanding how much money you make, and where that money goes. A budget can help you find ways to spend less money, save and invest your money, and enjoy your money on things that are important to you.

For single moms, a budget can help you focus on growing your income and stop being dependent on child support and alimony. 

What is the 50/30/20 budgeting rule?

Senator Elizabeth Warren popularized the so-called 50/20/30 budget rule in her book, All Your Worth: The Ultimate Lifetime Money Plan. The  50/20/30 budget rule is to divide up after-tax income: 

  • 50% on needs
  • 30% on wants
  • 20% to savings

How can I budget on a low income?

Budgets are especially important if your income is low — an outline of where your money goes, and where you want it to go, can help you stretch all your cash. This helps you feel in control and make decisions each day to make the most out of your income.

More on why budgeting is essential:

We created this guide for single moms looking for low-income resources:

Help for single moms: 16+ resourcesFree daycare
Free laptopsScholarships for single moms
Free carFree formula
Free smartphoneBest jobs moms can do from home
Free wifiFree and low-cost prescriptions
Free clothesFree diapers
Government assistance for single momsFree gas
Free preschoolAffordable dentures
Free money10+ charities that help single mothers

The bottom line: My best budgeting tips for single moms

Here are my top 3 budgeting tips for moms:

1. Top budgeting tip for single moms: Track your spending

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. Try a free trial of YNAB to get started now.

Learn more about building wealth as a single mom.

2. Budgeting tip: Consolidate your debt

Whether it means refinancing your student loans, paying off or transferring your cards into a 0% credit card, refinancing your home to pay off debt, or otherwise managing your balances and interest rates to streamline what you owe, making it simple often also saves you money.

3. Budgeting tip: Have a goal

Humans are more productive when we are working towards something. Instead of just focusing on a zero debt balance — which is a wonderful goal — focus on the next step. What does that achievement get you? Does it mean you can qualify to buy a home? Help pay for your child's college? Go on a much needed vacation?

Or, maybe now that you have extra cashflow, it is time to save for and invest in retirement?Want to get your finances in order? Earn more, pay off debt and stop stressing? Join my 52-Week Money Challenge now! 100% free!

Learn about our $500 single-mom monthly grant

What does a budget do for single moms like me?

A budget is an important part of understanding how much money you make, and where that money goes. A budget can help you find ways to spend less money, save and invest your money, and enjoy your money on things that are important to you.

How can I budget on a low income?

Budgets are especially important if your income is low — an outline of where your money goes, and where you want it to go, can help you stretch all your cash. This helps you feel in control and make decisions each day to make the most out of your income. founder Emma Johnson is an award-winning business journalist, activist, author and expert. A former Associated Press reporter and MSN Money columnist, Emma has appeared on CNBC, New York Times, Wall Street Journal, NPR, TIME, The Doctors, Elle, 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. As an expert on divorce and gender, Emma presented at the United Nations Summit for Gender Equality and multiple state legislature hearings. More about Emma's credentials.

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