Almost 25 percent of families with dependent children in the United Kingdom are single-parent families, according to statistics cited by charity, Gingerbread. Approximately 90 percent of those single parents are women. As a single parent, you get used to carrying the full load of parenting, from the full-time childcare and household tasks to the financial obligations. When it comes to finances, single-parent families have to contend with surviving on a single income each month. As a result, many of them find sticking to their budget tricky, and end up building insurmountable levels of debt just to get by each month. With finances being a common stressor for parents, making a few simple changes can help these households improve their chances of staying within budget, and achieving financial happiness.
Make Cash Your Go To
Money management has come a long way since the ages where cash was the primary medium of exchange. These days we live in a digitalised and cash free society, and the use of cash is becoming more of a novelty than a regularity. While the convenience and other benefits that digital payments offer are great, the use of cash in budgeting situations can still be argued. Start with working out your budget and allocating your monthly costs into cash envelopes. While you can set up a direct debit for larger standard bills such as rent, council tax, and mobile bills, opt for other expenditures – such as your weekly food shop – to be cash based. There’s something to be said for handling cash versus cashless transactions. Seeing your money decrease as your spending habits tally up in the month encourages you to be creative, frugal and accountable when it comes to your spending. As a result, you are more likely to stick to your originally planned budgetary limits, and avoid dipping into savings or relying on consumer credit.
Make Your Credit Work For You – And Be Careful Not to Have It The Other Way Round
Credit cards are one of the most common debt downfalls for families, and a particularly go-to tool for single income families as they try to bridge the gap between their income and expenses. While they tend to be referred to in a negative light, credit cards can be incredibly useful and beneficial when used smartly and innovatively. The idea behind credit cards is to improve affordability for individuals by allowing them time to pay for purchases, similar to hire purchase agreements. However, over-reliance and inadequate tracking of purchases can quickly lead to a debt spiral, and with the added interest charges, it’s not difficult to see why debt levels amongst single parents are up 105 percent.
Yet the use of credit cards shouldn’t be shunned, and in fact, can prove to be invaluable to single income homes. Start with tracking your use of credit, and being mindful of your utilisation. It is generally recommended that credit utilisation is kept below 30 percent. It is also important to sync your credit card usage with your budget to judge your affordability. Too often, consumers finance purchases on credit without looking at their current budget to see if they could afford the repayments comfortably. Ideally, you want to clear your balance each month to avoid interest. However, this is not always possible, and understandably so. Therefore, take advantage of credit cards offering promotional interest-free periods on purchases or even balance transfers to give yourself a break from finance charges. Many of them also offer rewards, such as a loyalty perk including money back from purchases and vouchers or points to be spent in stores or restaurants. When choosing a credit card, take a look at these, and opt for one that best suits your lifestyle.
Give Charity And Thrift Stores Consideration
Raising children is an expensive journey; there’s no doubt about it. In 2019, the CPAG estimates that the cost of raising a child is £75,436 for a couple. For a single mother, this means you are financially responsible for this entire amount. Because of this, think in terms of prudency when it comes to regular necessities such as clothing, toys and even books needed for your children. Spend a few minutes online and looking at community boards to scout out local car boots and charity stores where you can purchase pre-loved items for your children in great condition but at a massive discount to the sticker price.
Get Your Rent/Mortgage Down If You Can
It is generally recommended that families should spend no more than 35 percent of their post-tax income on rent or mortgage costs. However, in 2018 the average rent in the United Kingdom was £912 and as much as £1590 in areas like London. Heavily populated and sought after areas like London see families spending as much as 41.1 percent of their income on rent. For a single parent and single income household, that percentage is a hefty one, and more likely to be the largest bill single parents face. Look into mortgage comparison offers to ensure you are getting the best offer (including the interest rate) and consider the pros and cons of location when it comes to pricing your family home. Is walking distance from certain amenities non-negotiable in exchange for a higher rental price? Although this is a more fundamental change and not an immediate one, it can pay off well by saving you hundreds of pounds each month. You can also look into reducing housing costs by making use of spare space in your homes, such as a spare bedroom that can be rented out, or the use of an empty garage or loft as office or storage space.
Life as a single mum can be daunting and tough, finance included. However, more importantly, it is feasible. Every day, millions of single mothers are building a better life for themselves and their families, including balancing the bills and their single income. While it takes commitment and sacrifice, these suggestions can help to ease the task of keeping your family afloat financially.