Being a single parent is difficult regardless of location, gender, or age. Without additional help, many parents feel anxious and overworked. To help manage life as a single parent, strategic financing creates extra room to breathe.
The Percentage Budget
Setting aside a specific amount of money each month will help parents stay financially afloat. While it’s intuitive to spend on necessities on a day-by-day basis, working with a percentage budget can help with the overall quality of life.
One of the most popular methods of percentage budgeting is the 50/30/20 rule. This means 50% of a monthly paycheck is used for absolute necessities. This includes rent, groceries, and bills.
30% can be devoted to luxury items and gifts. This can include going to the movies or a restaurant or can also go toward clothing or monthly streaming services.
The remaining 20% is kept for the future. This money can be spent on emergencies such as health conditions or car accidents. Retirement funds are a wise investment.
Save on Daycare
The average cost of childcare has increased since the pandemic. According to one report, the average U.S. parent is seeing an increase of 41% for childcare centers. If childcare costs are roughly the equivalent of a working salary, work-from-home jobs can save a significant amount of income.
Work-from-home jobs can be done in several different ways. Non-online jobs may include providing childcare for friends or working for a call center. Virtual jobs like teaching ESL or becoming a virtual assistant provide a social life outside the home.
Tax Breaks Make a Difference
Single parents may use tax deductions to help save money. Filing as the head of household is one way to lower rates. A child tax credit can also be obtained if the child meets certain requirements.
A Child and Dependent Care Credit is available for single parents with children under the age of 13. This tax deduction can reduce overall costs for parents who pay for childcare. Tax information and accounting software can help during this process.
Planning Is Key
Preparing for the future is one of the best ways to save money. This includes savings accounts as well as filing for tax benefits. Being a single parent often requires resourcefulness and outside help to make life manageable.