Budgeting Money, Investing Money

How to Prioritize Your Budget When You’re a Single Mom

piggy budget

Over the years. I’ve read many articles on how to create a budget. I’ve even recently completed Dave Ramsey’s Financial Peace University course. I follow really informative and inspirational blogs such as Mr. Money Mustache and Student Loan Hero. What I’ve learned is that advice for budgeting falls into 2 categories – Tortoises and Hares!

The first category (we’ll call them Hares) are those who cannot stand to have any type of debt at all. They will do anything and everything they can to pay down their debt. They will forgo savings and investments until their debt is paid off. They will often take extreme measures to get out from under their debt.

The second category (Tortoises) are those who are willing to maintain some “good debt” (mortgage, student loans) while simultaneously building wealth through investing and saving. Their approach is less extreme, and will take longer to pay down debt. They may end up paying more in interest over the long-term, but they don’t mind because they offset this with greater growth of investments.

So how does a Single Mama Super Saver prioritize her goals?

First, you have to get a clear picture of your finances. You must find out exactly how much you have coming, and going out. You need to know the exact amount of all your consumer debt balances (car payment, credit cards, gym memberships, personal loans, etc.). You also need to know how much the minimum balance is on each.

Second, you need to determine if you actually have enough income to cover all of your necessities (housing, utilities, transportation, food, medical and clothing).

Third, determine if you have enough money coming in to meet your minimum consumer debt payments.

If you don’t have enough income coming in to meet your necessities and minimum payments, then you MUST find more money either by reducing your living costs, or generating more income!!!

Okay, once you’ve decided how to cut costs or create more income, what do you do with the extra cash? How does a single mama prepare for the unexpected, invest in her future, yet take care of all the money demands of providing for her children?

You will have to decide which of the two categories of budgeters you fall into.

If you are in your 20’s Consider taking the Hare approach because you have time-on-your-side for investments. Prioritize putting $1000 into an emergency savings fund, investing a very small amount into your retirement accounts (even $25 a month will have a HUGE impact on your retirement savings account down the road). Once you’ve paid off your consumer debt, build your emergency savings up to 3 months of living expenses. When that is completed, go back and up your contributions to your retirement account.

Ideally your budget would look like this if you’re a Hare:

Based on $2600/mo post-tax income (after saving $1000 emergency fund):

$1560 for housing/utilities/food/transportation/medical

$260 for haircuts, clothing, makeup, holiday spending, birthdays, etc.

$25 for retirement (post-tax IRA)

$755 paying down debts

*If you have small children, you will have factor in daycare costs which should not exceed $500 for 2 children on this amount of income. If your daycare costs exceed this amount, you will need to find ways to generate MORE income!

If you’re in your 30’s or later, consider taking the Tortoise approach of paying down debt more slowly, and ramping up your investments for retirement. In your situation, you will still need to prioritize a $1000 emergency fund, but before you begin paying down your debt you should take advantage of any 401k or IRA programs you have at work. At the very least, strive to meet your employers 401k match so that you don’t leave money on the table. You have fewer years until retirement, and you will reap the benefits of the compounding interest plus the tax breaks. Once you’ve at least met your company match, begin finding ways to generate more income/savings to pay down your debt while building 3 months’ emergency savings.

Ideally your monthly budget would look like this if you’re a Tortoise:

Based on $2600/mo post-tax income (after saving $1000 emergency fund):

$1560 for housing/utilities/food/transportation/medical

$260 for haircuts, clothing, makeup, holiday spending, birthdays, etc.

$260 for retirement (assuming post-tax IRA. You will have more income if you use a pre-tax 401K).

$260 building a 3 month emergency fund

$260 paying down debt.

*Please see the note above regarding paying for daycare costs. 

Notice I used the word “Ideally” to describe both of these budgets. I realize that there are many factors that may impede being able to follow these budgets exactly. But, these are great goals to strive toward when planning how to prioritize your budget.

Please let me know if you found this information helpful!







2 thoughts on “How to Prioritize Your Budget When You’re a Single Mom”

  1. We were ‘hares’ until we decided to seek the advice of a financial expert and found that we could leverage our assets to help us realize our goals sooner. We have definitely converted to tortoises!


    1. I’m finding that I’m a mix of tortoise and hare…a Haretoise, lol! I am recognizing the advantages of long-term, growth of investments, but also looking for short-and-quick ways to make money in the present so that I can pay down my debt.


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