When there is more month than money
A Single Mom's Income Shortfall
by Gary Foreman
A Financial Safety Net for Single Moms
Money-Saving for a Single, Working Mom
Extra Income for Single Moms
I am a single mom raising two beautiful girls. My problem is that I am a high school teacher that already works a side job at a Junior College and I clean two houses for extra income; however, I am still $1,000 behind each month. Yes, my ex pays child support, but I can't seem to make ends meet. I am not living extravagantly; I really just need support from something. I don't think I could be approved for governmental assistance because of my career. Do you have any suggestions?
Good question! Basically Maria is spending more money than she takes in. That's a common problem. Let's see if we can't find a solution for her and others in a similar situation.
Maria's options are few. Increase her income. Reduce her expenses. Or some combination of the two. We'll begin by looking at her income.
We don't know how much she makes so we'll need to make some assumptions. According to Salary.com, the median salary for a high school teacher is $57,554.
If we look at the U.S. Statistical Abstract for 2006, we see that 50% of all households had income of less than $61,000 in 2009 (the most recent data). If we add part-time income and child support to her teacher's salary, it would appear that Maria's income is not the problem. And, she's right that assistance is unlikely.
So let's look at her spending. Maria didn't say, but if she's falling $1,000 behind each month and her income is over $57,000 it would appear that she's spending $69,000 or more each year.
How does that compare to the average family? Going back to the Abstract, we find that the average family of three spent $49,067 in 2009. So unless her salary is significantly below the average, between it, her part-time jobs and child support she should have enough money to support a reasonable lifestyle.
But, she doesn't have enough money. So where is it going? There are three common places that family budgets get bent out of shape: housing, food and transportation.
About one third of all the dollars we spend go to housing. That includes mortgages and utilities. It's possible that Maria is still living in a house that she and her ex-husband bought together. In fact, they may have qualified for the mortgage based on both of their incomes.
Typically, it's not possible for the ex-wife to continue living in the same house after a divorce. The house payment and utilities are too high. Maria should limit her housing expenses to no more than 35% of her budget. Forty percent is an absolute maximum. If she's above those levels, she'll need to move to less expensive housing.
The next potentially troublesome area is her automobile. A little less than 20% of the average consumer's money goes to transportation including gas and maintenance. Just like housing, if Maria finds that she's spending too much on her vehicle, she'll need to trade-down to something more affordable.
The final big area of routine expenses is food. We spend about 1/8th of our money on groceries and foods prepared outside the home. This is often an area that ruins budgets, especially for single parents. The reason is simple. Maria's schedule doesn't leave her much time to cook. It's only normal that she'd use many "convenience foods" as well as fast food take-out to feed her family. But, that can get expensive if you do it day after day.
How can she trim her food budget? There are a variety of tools she can learn about. Among them is a "price book" that will help her track low prices. "Freezer meals" can put a healthy, home-cooked meal on the table in minutes at a fraction of fast food prices. She might even want to learn about forming a dinner swapping club. That's where you cook one meal for your family and additional meals (same menu) for the families of your swap partners. They do the same for you.
The only way Maria will know if any of these areas are in trouble is to do some calculations with her checkbook and credit card statements. Budget software can help her tally the expenses.
There is one other possible budget buster. That's paying off past debts. If Maria owed $10,000 in credit card debt, her minimum payment would be approximately $400 per month. She could try to roll the debt into lower cost home equity debt or she might want to contact a credit counselor about setting up a repayment plan.
Maria will probably find that there's no one solution to her problem. She'll need to make a number of changes to close the $1,000 a month gap.
If you're in a similar situation, you can check how your income and expenses compare to the averages by doing an internet web search on "U.S. Statistical Abstract." Once you get to the Abstract, look for the section on "Income, Expenditures, and Wealth" for specific tables. For instance, the one on income came from Table 673.
updated September 2016
Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, Credit.com and CreditCards.com. Gary shares his philosophy of money here. You can follow Gary on Twitter or visit Gary Foreman on Google+. Gary is also available for audio, video or print interviews. For more info see his media page.
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