When you’re parenting alone, you’re also a single earner, which can pose some real practical problems when something unexpected occurs. While two incomes make it easier to adapt to events and absorb extra costs, those of us living day-to-day raising a child without a partner know all too well that managing your finances as a single mum can be challenging. So, the experts at Savvy have outlined some strategies that can help single mums put a little distance between themselves and financial pressure.
Budget, budget, and then budget some more
Record what you spend on necessities such as rent or a mortgage, food, and child-care, for example. Next, record those items that are luxuries, then a third list for everything that falls somewhere in between. It’s an excellent way to visualise and identify areas where you’re overspending or could save some cash each week. Moneysmart, a project of the Australian Securities & Investments Commission tasked with helping consumers save money, provides a handy guide for setting a household budget.
Getting back in control: spending you can eliminate
When life is busy, you’re probably wasting a few dollars or more here and there. “When you examine your monthly expenses and can’t remember the last time you used a subscription or a recurring expense such as a gym membership, get rid of it.”
That’s the advice from Savvy CEO and personal finance expert Bill Tsouvalas. “some of us accumulate expenses as we go, and part of getting your finances in order is performing a self-audit every once in a while.” You can use your budget to look at areas where you could save money:
- The grocery bill is always a good candidate. Consider buying in bulk or switching to cheaper brands.
- When eating out, search for coupons or meal deals online prior. A little forethought and planning can result in significant savings.
- Save on coffee – if you can’t make your own before leaving home, then find the café with the best loyalty card system. Some big chains even have a buy 4, get 1 free offer on their app!
- Consider bringing your lunch to work instead of buying takeout.
- Review your gas and electricity bills. A 2019 study by the Australian Energy Market Commission found the average household can save an astonishing $760 each year by switching suppliers.
Transport and work: cut back on the luxuries, not the essentials
In Australia, cars are a parenting necessity, and often essential for our jobs and putting food on the table, too. When you’re examining your finances, prioritise what empowers your family.
A 2016 survey by Household Labour Income and Family Dynamics in Australia found that about a quarter of younger Australians cite transport as a barrier to getting a job, with most problems occurring on the outskirts of major cities and in country areas. Bill Tsouvalas says finding cost-effective ways to manage your essential spending can be more productive than solely cutting back. “Comparing products is always about saving money, but many people neglect to do that when it comes to financial products. Most Australians need to use finance for a major purchase like a car or house, irrespective of their earnings. As with utilities, shopping around can produce some big savings, and you can easily compare car loans and other finance products online these days.”
Control your finances: get rid of joint debts
Many single parents are still financially connected to an ex-partner, which can work against them when it comes to managing their finances. That could be through a loan or a credit card, but you should look to sever the connection immediately, whatever the type of debt.
In the case of a joint credit card, you’ll need to ask them to transfer their share of any outstanding balance onto their own account. Merely agreeing to keep the joint account and pay your respective portions of the debt isn’t wise because it puts you in a position where your personal credit rating is vulnerable.
Know where you stand: check your credit rating
When it comes to borrowing money, your credit rating will influence the interest rate you will receive: the better the rating, the lower the rate. Unfortunately, past relationships can have a lasting effect in this regard, so it is important to know where you stand.
Bill Tsouvalas says, “You can check your credit report once a year for free or each time you get turned down for a loan or credit card. As a single mum, you’re likely going to need a borrowing facility here and there – and credit makes sense when used for the right reasons. It’s important to know what’s going on with your rating and identify any issues connected with your ex. You’ve already made sure credit card and borrowing ties have been severed, so now examine your credit report so you can be sure you’re making an entirely fresh start and in charge of your own financial future.”
Stay on top: do a monthly check-up
Finally, double down on your efforts by scheduling a regular check-up with yourself. Prioritise and pay any bills you’ve already received. Take stock of your debts, loan payments, and credit card balances. Scan your bank accounts to see what’s left once you get everything paid up to date.
When you know exactly where you stand, start on your grocery shopping list. You’ll be far less prone to overspending when you do things in this order. Get into the habit each week or month.