Take action now to monitor, prioritize, and redirect your spending, and your family will be in a better place just a few months from now. This is a great way to determine which expenses are really important and which aren’t.
Unless you start making more money, the only way to start saving more is to spend less. Cutting down unnecessary spending is one of the easiest ways to improve your financial future.
Step 1: Track Your Spending
First you’ve got to know where your money is going, then you can decide what to do about each expense. There are a lot of tools available to track your spending. For instance, some banks offer free online banking, which include a way to track your spending and create a budget. If not, you should purchase a program for your computer that shows where your money is spent, and breaks it down into different categories for easy viewing.
Step 2: Categorize Your Expenses
Either on your computer or in hard copy, put all of your expenses into four categories:
1. Expenses that can be eliminated – black
2. Expenses you can bring down – red
3. Expenses you need to negotiate – green
4. Fixed expenses – blue
Any expense that can be eliminated, cross off with a black pen, for example: movie tickets.
Any expense that can be brought down, mark with red. Example: Lunch and dinner cost, or deciding to downgrade your cell phone plan.
Any bill that might possibly be negotiated for better terms, highlight in green. Example: deferring a school loan, or refinancing your mortgage, or getting a better rate on car insurance.
Step 3: Make the Tough Decisions
Based on your findings how much of your income is wrapped up housing? If the answer is over 30% consider downsizing to a smaller house or apartment. Consider selling your car and buying a more reasonable model if too much of your income is spent on transportation.
Is there a way to bring down the cost of family vacations, or the monthly entertainment budget? Make those tough sacrifices to get out of debt.
Step 4: Form a New Budget
Your new budget should only include the reduced and fixed expenses you marked in the second step, and they should take action on your tough decisions. Withdraw enough cash at the first of the month for your budgeted spending. When the cash runs out, no more spending, no exceptions.
Step 5: Get Help
Look for support from family, friends, and a trusted service. For example, CareOneCredit.com is a great resource for debt elimination, budgeting, and counseling.
Samantha A. Gregory is an author, consultant, and speaker. She’s a single-mom lifestyle, money, and parenting expert featured in The Washington Post, The New York Times, Essence Magazine, HuffPost, ABC News, and Mint.com.
Samantha founded the award-winning RichSingleMomma.com™, the first online magazine featuring personal finance, parenting, and personal development content and courses for single moms.
She aims to inspire women who are ready to thrive and not just survive in their single motherhood journey. Connect with her on Instagram @richsinglemomma.
