My Story: A Single Mom's Advice
by Rebecca Stuck
I became a single mother 5 years ago when I chose to leave an abusive marriage. We had our share of problems including our different opinions about money. My ex was a compulsive spender and was usually at any given time half a year's income in debt. I, on the other hand, have always been a saver. I do not know if this was a learned behavior. My mother required me to save 10% of my allowance and later my income and tithe another 10%. On my own, these numbers have increased to 30/10. I live off of 60% of my income. This is not easy, but it is doable.
Here are the steps I recommend taking:
- Set up a budget. If nothing else, track your expenditures. I have a ball park figure that I try and stay under. I use quicken to track my money.
- Take a cold hard look and make a list of all the non-necessities that you buy. Go back and number them in order of importance. Eliminate (or reduce) the least important ones. Remember a penny saved is more than a penny earned due to taxes.
- Pay down debt. Figure out what you are paying the highest interest on and work on that first. Remember, there is a big difference between simple interest and compound interest. This can cost you big money if you don't know the difference.
- Start saving. I invest in several different vehicles and methods. (see below) It makes you feel good to see a result from your efforts.
- Raise your income earning potential. There comes a point when you simply can not cut back any more. I only earn $18,000 a year and live in a expensive part of the country. I know for a fact that I qualify for food stamps, but I feel comfortable without them. (If you are in need, take them. That's what they are there for and there is no shame in it!) I continue my education and own a small business that I run from my home that I do not draw an income off of yet. I hope to work from full time before my son enters grade school.
- Take full use of any and all benefits your employer offers you. I use direct deposit and almost never carry cash. I use both medical and daycare reimbursement accounts, which uses pre-tax dollars from my paycheck. I use my 401k and put the max of 15% of my income in it. I also have an Individual Retirement account that I put $166.66 a month into (also the max.). Because my income is so low, this is fully deductible off my taxes. I also have money directly deposited into my "emergency fund" that is for serious emergencies and once-a-year payments.
- Be creative. For instance, does someone in your home have a hobby? Try turning it into a part-time business. If you create a profit motive (keep very tight records on this and consult your accountant), you can write off a lot of your costs and earn some extra money too.
Debt from my past is preventing me from saving for my future! Tell us: Yes, debt is hindering my ability to save! or No, debt is not a problem but I am trying to get ahead financially!
Rebecca provided this additional information about herself: 26, single mother of one son (4). Successfully bought a home after the break up of her marriage. Runs a small financial services company from home- Atkinson and Barnes Financial Group, Inc. She was also the subject of the a Woman's Day article - "How America is cutting back"
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