10 Money Tips for Single Mums
The current economic climate presents enormous challenges for most families; for the single mum there is an additional strain on an already stretched budget. In Nigeria, single mothers often face unique challenges with alimony and child support often not enforced following a fractured relationship, and an often unsympathetic or even hostile extended family following the demise of a spouse or partner. Financial security is of topmost concern particularly where the women has been a home maker and not earning at all; indeed, many single mums worry about how they will manage on one income, and how to ensure that should anything happen to them, their children will be taken care of. If you are a single mum, here are 10 tips for you to consider:
- Do you have clear goals in place?
With all the decision-making lying at your feet you do need to have clear short, medium and long-term financial goals. Short-term might be to pay off some of your debts, build up some emergency savings. Medium and long-term goals may include buying a home for yourself and the children, investing for their education and your retirement.
- Assess where you stand financially
You may have received a large sum of money from a divorce settlement or a death benefit, retirement or inheritance. Don’t make any hasty decisions about the money; place it for the short term, say 90 days whilst you seek professional advice to determine the next steps.
Budgeting takes on a new meaning, where there is only one income to support a family. It is a tested tool that keeps one in control of your finances if you stick to it. Your priorities are likely to include your mortgage or rent, school fees, utility bills, food, clothing, childcare, vehicle expenses, insurance and of course, savings. Can you cut back at all? Look at your utility bills for example; is there any way you can reduce them? Are you able to reduce your debt? Paying close attention to how you spend over a month or two will help you to plan systematically towards your financial goals.
- Do you have an Emergency Fund?
Without a second income to fall back on, many single mothers can be quite vulnerable in an emergency. Whilst support from the extended family and friends is welcome, it is advisable not to rely upon it totally as they might have challenges as well. Children and aging parents fall ill, or there may be car or home repairs to worry about; it is impossible to predict such events. Automate your savings and set aside about six months of expenses in an interest bearing money market account in anticipation of this.
- Develop and nurture your skills and talents
Now is the time to leverage upon your natural gifts and talents if you have ignored them before now. With some attention, they could well provide very real income earning opportunities for you. Update and send your CV whilst you consider your options. If you have been a full-time home mum for several years, you are likely to be rusty, so consider enrolling on a course to improve your knowledge and prospects before you rush into anything.
- Where will you live?
One of your priorities should be to find a secure and affordable place to live. It can be tempting to try to maintain an expensive home that may have been funded by your ex or that relied upon two incomes to sustain it. Whilst your desire may be to live in a decent home in a safe environment, or keep your children in an expensive school, be sure that you can afford to live where you choose to live. Sometimes it is better to “downsize” for the short term, than to try to maintain standards at all costs. Don’t put yourself under unnecessary pressure; just stay focused on the big picture and not what the Joneses will say.
- Are you insured?
For a single parent, health, life, and education insurance are very important. If you are the primary breadwinner with dependents, it is your responsibility to try to build some financial cushion should you lose your job, become ill or disabled or in the worst case scenario, in the event of your untimely death. A life insurance policy will help to replace and protect your income and can help to prevent your children from becoming totally dependent on the charity of relations or friends. It can also provide legal guardians with the resources to take care of your children. An educational policy should ensure that your plans for their education are not derailed. Seek advice from a reputable insurance company who will help you to determine how much and what type of insurance coverage will best meet your needs and situation.
- Invest for the future
As a single mum, it may be difficult to save for both your retirement and other important goals such your children’s education, but you cannot afford to ignore your own retirement needs. The earlier you start saving for your retirement, the better. Open a Retirement Savings Accounts (“RSA”) with a Pension Fund Administrator (“PFA”) and fund it even if you are running your own business. By starting to plan and invest early, even a little amount put aside regularly over several years will grow over time into a significant sum. Some excellent stocks are currently selling well below their true value. Seek professional advice to see if it makes sense, given your risk profile and other commitments, for you to buy stocks directly through a stockbroker or through a mutual fund. This is a good opportunity to work towards your long-term goals.
- Do you have an Estate Plan?
An estate plan is important for everyone but even more important than ever for a single parent. Verbal instructions carry little weight; if you die intestate, that is, without a written will, everything involving your estate and your children will be decided by a probate court and might not be in accordance with your wishes. A will provides clear directions about who will inherit your assets including your property, bank accounts and investments, who will execute your affairs after your death as well as who will play a guardianship role for your children, in the event of your demise. Explore other estate planning tools including a living will or a trust.
- Avoid over-indulging your children
It is tempting to spoil your children; try not to balk under the pressure to provide for their every whim; this only leads to them to develop a sense of entitlement and brings even greater challenges with their upbringing and damages your finances. There is so much peer pressure in our materialistic society. If you are clearly focused on your goals, you will be less likely to be derailed by perceptions or what others are doing or what they will say.
It is your responsibility to provide them with their needs but not all their wants. As they get older, you can begin to involve them in discussions regarding family finances so they understand the family goals. As early as appropriate, encourage them to learn to earn their own money through holiday jobs and internships. It makes them more responsible and they get to understand the value of money.
- Have some fun
In the midst of all this, it is important to remember that it is not all about money. Consider some down time, quality time, the health and wellbeing of yourself and your family. Try to build in some fun into your plan so that you are better able to cope with stress and can have a better chance of remaining healthy and happy.
Whilst single parenthood often features as one of life’s major challenges, with discipline, careful planning and budgeting, one can emerge confident in one’s ability to provide a comfortable and secure lifestyle for your family.
Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.
For more personal finance tips, contact Nimi:
Email: [email protected] | Website: www.moneymatterswithnimi.com