The idea of saving money as a single mom can seem like an impossible dream. Children are expensive and you might already be living paycheck to paycheck as is. And a lot of the budgeting or money saving tips you find out there just don’t seem to take into account the financial reality you are dealing with.
This article is for you. It’s not going to give you unrealistic advice that is impossible for you to follow. These tips are specifically designed for single moms who want to provide the best that they can for their children while still working to get themselves out from under a pile of debt. So here are some tips that you can actually use!
#1 Negotiate Bills & Interest Rates
This is one of the first steps you can and should take. On a day off, spend a morning or afternoon getting your monthly payments lowered. It’s a little-known trick that you can often get your bills and even your interest rates lowered by just calling up and asking them to lower them!
It sounds insane but it’s true. Here’s what you do:
- Make a list of every bill you pay each month (including any credit card or debit payments). The list should include what the bill is, how much your current payment is, and, if applicable, what your current interest rate is.
- For each bill, find a competing company with a lower payment or rate. They’re out there. Note the lower competing rate next to the bill.
- Call your current providers one by one and tell them that you want a lower rate or you’ll switch to the competitor.
- Be persistent. Be polite and patient but be persistent. They may try to keep you on hold for a long time or transfer you from person to person. And they will likely say no quite a few times. But keep at it and eventually, you’ll get the yes.
It takes patience and effort. And it’s not going to work on every single bill. But even if you lower just a few bills this way, that’s savings that you wouldn’t have had if you didn’t try!
#2 Create a Financial Plan
As soon as you finish this article, you should immediately do an audit of your own finances. How much money are you earning? And where exactly is it going? Figure out exactly how much you are spending and where it is getting spent.
There is a very good chance that you are leaking money. That is, you are spending more than you need to in a lot of areas. Some of the biggest causes of wasted dollars are the following:
- Groceries. If you ever find yourself throwing away food that went rotten before you ate it or digging through the pantry to find canned food you didn’t even know you had, you are wasting money. Make a meal plan before each grocery trip. Buy only the ingredients you need for those meals (and only as much as you need to make them). Never waste a single cent on uneaten food again.
- Utilities. Forgetting to turn off the thermostat, lights, or appliances before leaving can lead to paying for 8+ hours of energy that you didn’t even use. Leaving appliances plugged in when you’re not using them is another drain. You can save hundreds each year without even changing your habits if you just stop spending money on energy you don’t use!
Once you’ve figured out where your money is going, create a plan to take charge of your expenses. Start by plugging the leaks like the ones mentioned above. Then look for bills or expenses that you can afford to live without—like cable TV or that landline that hasn’t rung since 2003.
You can potentially save hundreds each month by just being more conscious and aware of how and where you spend your money. And imagine how quickly you could pay off your debt with an extra few hundred bucks each month?
#3 Be Alert to Free Stuff & Coupons
Some of the products you use regularly like shampoo, soap, and diapers can’t be avoided. No matter which way you look at it, you need to spend money here. But, you don’t always need to spend as much as you do.
Lots of companies give away free samples in hopes that you’ll like the product and become paying customers. Others are regularly offering some pretty serious discounts with coupons or special online deals.
The important thing is that you only use this trick for getting stuff that you already were going to buy anyway. Using a coupon for something that you don’t normally get isn’t saving money. It’s spending money. But using a coupon on something that you have to buy anyway is a great way to save a little extra cash each month!
#4 Create an Emergency Fund
The money you have trimmed away from your budget using these tips should first be put into a savings account until you have $1,000 in savings. This savings is an emergency fund. Don’t touch it except for emergencies.
And any time you have to pay for an emergency, make payments into your savings to get it back up to $1,000 as quickly as possible.
Having this emergency fund is especially valuable for single moms living paycheck to paycheck. Because if everything you are earning is going out in regular expenses, any kind of emergency can end up forcing you to go deeper into debt.
So while it might seem like you should be putting that $1,000 toward debt payments immediately, this emergency fund actually comes first. Because it will prevent you from having to go deeper into debt even while you’re trying to pay it off.
#5 Put Every Extra Bit toward Debt
With your budget trimmed down as far as it goes and your emergency fund in place, it’s time to start making a dent in that debt. Put all this money you’ve freed up from your budget toward debt payments. This may mean that you are still living paycheck to paycheck but at least your debt is shrinking.
The faster that you pay off your debt, the less you have to pay in interest. So paying debt is also like saving money. Here’s a basic plan for paying off debt:
- Make a list of all your debts in order from the smallest amount owed to highest.
- The item at the top of your list (the smallest amount owed) is your top priority. Budget out minimum monthly payments to all the others and then put all the rest toward this top priority debt.
- Once the smallest debt is paid off, move on to the second one.
Paying off debt in this way is efficient and motivating. That’s because it’s the quickest way to cut down on the number of bills you are paying each month.
Using all of these tips can free up a lot of cash from your existing budget and help you finally eliminate that burden of debt. So pull out that pen and paper right now and start making the financial plan that will lead to a debt free life!
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Kostas Chiotis is an economist and the blogger behind FinanceBlogZone.com. You can follow him on Facebook and Twitter