How I did it: Learned to budget as a single mom

October 17, 2023

Becoming a single mom made me re-evaluate my spending habits in a big way.

 

By Erin Gulden, Vice President, U.S. Bank

I have a confession – I’m in my 40s, and I’m not the best budgeter. And I’m embarrassed to admit it has taken me this long to start doing something I could have benefited from years (decades!) before.

Now, let me be clear, I’m not late to budgeting because I had endless access to cash. My ex-husband and I bought a Fixer Upper (capital letters for emphasis) after the housing marketing crash and put a lot sweat equity into turning our little city bungalow into a beautiful home. As a result, our mortgage payment was extremely low. And since we were both fortunate to be employed, our low cost of living meant we didn’t have to watch our cash flow carefully, as long as we were being reasonable.

A few years ago I became a single mom and needed a new place for my young son and I to live, and that was going to come with a steep increase in my house payment -- and now on one income. But with rent in our city being at an all-time high, renting wasn’t a great option either.

After crunching the numbers, I realized the best choice was to buy, but buying a home on a single income meant I’d need to figure out a budget.

I got started by checking out a few articles on Financial IQ, which included everything from budgeting strategies to worksheets. I also had a budget worksheet from my financial planner (another recent addition to my life that I wish I’d had much sooner, but that’s for another post!).

I saw one strategy suggested over and over – write down everything you spend in a month. Many people do this by keeping a daily journal and writing down all planned and unplanned expenses each day. Instead, I chose to go to my online bank account and scrolled through the last 60 days of transactions. That helped me identify all of my monthly, scheduled expenses, but it also helped me see patterns in my spending (side note: There are apps, like the U.S. Bank Mobile App, that will do this for you. I’m old-school and enjoyed putting pen to paper for the exercise).

Some things I learned:

  • I had at least $150 a month in subscriptions that I barely used and could easily end.
  • I was paying for separate swimming, tennis, and judo lessons for my son. After a little research, I found a health club that offered all of the above, and bonus, I could work out, too! So hundreds of dollars a month in activity fees were cut in half.
  • I improved my cash flow by changing my mortgage payments to twice-monthly payments. (Bonus – this will also pay down my mortgage more quickly).
  • I was spending far more than I needed to “just to spend”. Meaning, since before my move I didn’t have to watch my cash flow closely, I wasn’t watching it closely enough, and looking back, some of my spending seemed a little silly.
     

At the end of my exercise, I was able to find enough in my budget to swap to make me more comfortable with my monthly cash flow. It really helped me to think of “swapping” items in my budget instead of cutting things out. After making swaps, I don’t feel like I’m depriving myself, but rather spending my money on something that is meaningful to me – my home!

I also identified how much money I had left at the end of each month and started a short-term savings program to supplement my long-term (aka retirement) and emergency savings. It isn’t much, but it’s enough to make sure I can have some security, make some home upgrades and travel.

Finally, after subtracting my monthly expenses and savings, I have a true understanding of how much “fun money” I have each month, and which really helps me keep that “silly” spending in check.

 

Assess and develop a budgeting strategy that fits your financial life. Here’s a step-by-step guide to help you get started.

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Disclosures

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Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.