Build a Realistic Budget as a Working Mom: How to Save Money and Take Control of Your Finances | INVESTEDMOM
As a working mom, creating a realistic budget can be a challenge. You have to balance your monthly expenses, emergency fund, retirement savings, and personal loans, all while making sure you have enough money for unexpected expenses. But with the right strategies and mindset, you can create a budget that works for you and your family.
In this article, we'll explore some tips and strategies to help you create a realistic budget as a working mom. We'll take a more traditional approach, then explore the flipside - a more relaxed approach to budgeting. There's a solution here for every Mama!
Start with Your Monthly Income
The first step to creating a realistic budget is to start with your monthly income. This includes your gross income, any child support or other income, and any employer matches for retirement savings. Next, calculate your take-home pay by subtracting taxes, health insurance, and other deductions. This will give you a clear picture of how much money you have to work with each month.
Calculate Your Fixed Expenses
The next step is to calculate your fixed expenses, such as your mortgage or rent, property taxes, car insurance, and health insurance. These are expenses that stay the same each month, so you can plan for them in your budget. Make sure to include all your living expenses, such as groceries and utilities, in this category.
"Research shows that the average household spends around 33% of their income on housing, and 17% on transportation. These are fixed expenses that you need to budget for, but it's also important to keep an eye on your variable expenses." - Megan Robinson, DollarSprout
Track Your Variable Monthly Expenses
Variable expenses are those that change from month to month, such as entertainment and clothing. To budget for these expenses, track your spending for a few months to get an idea of how much you typically spend in each category. Then, set a monthly budget for each category based on your spending habits.
"According to a recent study, only 30% of Americans have a long-term financial plan. By creating a realistic budget, you can take control of your finances and start building wealth for your future." - Ryan Ermey, Kiplinger
Open a Savings Account
One of the best ways to save money is to set up a savings account specifically for your emergency fund and any other savings goals. You can set up automatic transfers from your checking account to your savings account each month so that you are always putting a few dollars toward your savings. This can help you build up an emergency fund, which can be used to cover unexpected expenses, like medical bills or car repairs. When you're saving money, you're also able to invest. And investing is the true secret to building wealth and having extra money.
"In 2020, 56% of Americans reported having less than $5,000 in savings, while 33% had no savings at all. By setting up a savings account and creating a realistic budget, you can start building up an emergency fund and avoid going into debt for unexpected expenses." - Alex Saez, Forbes
Use a Zero-Based Budget
A zero-based budget is a budgeting process where all of your income is allocated towards expenses, savings, and debt payoff. This means that at the end of the month, you should have zero dollars left over. This can be a very effective budgeting tool for working moms who want to take control of their finances, because it forces you to account for all of your expenses and make sure that you're not overspending in any one category.
Plan for Unexpected Expenses
It's important to plan for unexpected expenses when you're creating a realistic budget as a working mom. This means building up an emergency fund and being prepared for things like medical bills or unexpected home repairs. By planning for these expenses, you can avoid going into debt for unexpected expenses and stay on track with your budgeting process.
"According to a recent study, the average American spends over $300 per month on non-essential items like dining out and entertainment. By tracking your spending and making adjustments to your budget, you can save money and put it towards your financial goals." - Erin Lowry, Broke Millennial
Review Your Budget Regularly
To make sure that your budget is effective, it's important to review it regularly. You can do this by tracking your spending on a regular basis and comparing it to your budget. This can help you identify areas where you're overspending and make adjustments to your budget as needed.
A More Relaxed Approach to Personal Finance: Focus on Your Goals and Priorities
As discussed, the traditional approach to personal finance often involves tracking every penny you spend and strictly adhering to a budget. And it does work. But while this can be effective for some people, it can also be time-consuming and stressful for others. Link moms with ADHD. A more relaxed approach, on the other hand, focuses on your goals and priorities, allowing you to make intentional spending decisions without worrying about every small expense.
One key element of a more relaxed approach to personal finance is setting specific financial goals and working towards them. Having a clear purpose for your savings can help motivate you to stick to your financial plan. By focusing on your goals and priorities, you can make intentional spending decisions that align with your values and help you achieve financial success.
Another aspect of a more relaxed approach to personal finance is being mindful of your spending habits and finding ways to cut back on unnecessary expenses without sacrificing your quality of life. This might involve canceling subscription services you no longer use, cooking at home instead of eating out, or finding creative ways to enjoy your hobbies without spending a lot of money.
It's important to remember that a more relaxed approach to personal finance doesn't mean ignoring your finances altogether. Rather, it's about finding a balance between financial responsibility and personal well-being. By focusing on your goals and priorities and being mindful of your spending habits, you can achieve financial success without feeling overwhelmed or stressed out. So, take a deep breath and relax – you've got this!
7 Budgeting Tools Every Working Mom Needs to Manage Their Finances:
Mint: This popular budgeting app allows you to track your spending, set up alerts for bills and payments, and monitor your credit score.
YNAB (You Need A Budget): This app helps you create a zero-based budget, meaning that you allocate all of your income to specific expenses or savings goals, with the aim of having no money left over.
PocketGuard: This app helps you stay on top of your spending by automatically categorizing your expenses, setting spending limits, and tracking your bills and subscriptions.
Goodbudget: This app uses the envelope system, where you allocate cash or virtual "envelopes" to specific budget categories and track your spending against those limits.
Personal Capital: This app is geared towards managing investments and retirement savings, but also includes budgeting tools and alerts for your bank accounts and credit cards.
EveryDollar: This app is based on the principles of the 50/30/20 budgeting plan, and allows you to track your income and expenses and set up a monthly budget based on those ratios.
Honeydue: This app is designed for couples who want to manage their finances together, and includes budget tracking, bill payment reminders, and shared access to accounts and transactions.
Money-Saving Mama FAQ:
-
A: Start by tracking your spending and identifying your fixed and variable expenses. Then, use a budgeting app or spreadsheet to create a monthly budget that takes into account all of your expenses and income.
-
A: Look for ways to reduce your fixed expenses, such as housing or transportation costs, and try to cut back on non-essential expenses like dining out or entertainment. You can also set up automatic savings contributions to a separate savings account or take advantage of employer matching programs for retirement savings.
-
A: A good rule of thumb is to have at least three to six months' worth of living expenses saved up in an emergency fund. This should cover unexpected expenses like medical bills or car repairs.
-
A: Use cash or the envelope system for variable expenses, avoid overspending in any one category, and try to stay disciplined with your spending habits. You can also make adjustments to your budget as needed, but be sure to stay committed to your financial goals.
-
A: By creating a realistic budget and sticking to it, you can avoid going into debt, build up savings and emergency funds, and work towards long-term financial goals like retirement or a down payment on a house.
-
A: Start by tracking your spending and identifying your fixed and variable expenses. Then, use a budgeting app or spreadsheet to create a monthly budget that takes into account all of your expenses and income.
-
A: Look for ways to reduce your fixed expenses, such as housing or transportation costs, and try to cut back on non-essential expenses like dining out or entertainment. You can also set up automatic savings contributions to a separate savings account or take advantage of employer matching programs for retirement savings.
-
A: A good rule of thumb is to have at least three to six months' worth of living expenses saved up in an emergency fund. This should cover unexpected expenses like medical bills or car repairs.
-
A: Use cash or the envelope system for variable expenses, avoid overspending in any one category, and try to stay disciplined with your spending habits. You can also make adjustments to your budget as needed, but be sure to stay committed to your financial goals.
-
A: By creating a realistic budget and sticking to it, you can avoid going into debt, build up savings and emergency funds, and work towards long-term financial goals like retirement or a down payment on a house.
What's next?
Creating a realistic budget as a working mom is an important step towards taking control of your finances and achieving your financial goals. By starting with your monthly income, calculating your fixed and variable expenses, setting up a savings account, using a zero-based budget, planning for unexpected expenses, and reviewing your budget regularly, you can save money and build a more secure financial future for you and your family. So, start budgeting today, and don't forget to celebrate your progress along the way!
Join the Wealth Builders Academy Membership and get access to a community of people on the same journey, learning how to become financially free and live an unrestricted life!
Stay Invested xx
Meet the Author:
Inge was born and raised in Cape Town, South Africa, and moved to Canada in 2010 looking for a better life. She always had an entrepreneurial spirit and started her first side hustle when she was 9 years old – selling fudge at school during lunch breaks.
It wasn’t until much later that she realized that saving isn’t enough to get ahead. She was always very interested in real estate, but saving up for a down payment was grueling and slow, and the demands of life kept getting in the way.
She started investing in herself and upgrading her skills while learning how to invest. She quickly became debt free and compounded her money at a staggering rate.
It wasn’t until she became a coach that she realized how significant an impact she can make in people’s lives by sharing her journey, learnings, and processes.
So here she is, advocating for everyone who is invested and wants to build their wealth, especially the mommas!