Today’s high cost of living presents challenges for most families. However, for the single parent, particularly the single mother, there is an additional strain on an already stretched budget. Single mums face unique financial challenges as they simultaneously try to provide for the family, take care of their own financial needs, whilst ensuring that should anything happen to them, the children will be taken care of. Below are 8 money tips for single mums.
When there is only one income to support a family, budgeting takes on a whole new meaning. Set a realistic budget and try to stick to it; this will form the basis on which you can confront any financial pressures. Your priorities are likely to include your mortgage or rent, utility bills, food, clothing, childcare, vehicle expenses, insurance and savings. How much is going to each category, and is there anything you can cut back on? Paying close attention to how you spend over a period of a month or two is good preparation for establishing a budget that will help you to plan systematically to meet your immediate needs and long-term financial goals.
Build an Emergency Fund
The vast majority of single mums raise their kids with little or no financial other support from their children’s fathers. With no second income to fall back on, single mothers could find themselves in a difficult situation in an emergency. Children fall ill, or there may be car or home repairs to worry about; it is impossible to predict such unexpected events. Set aside about six months of expenses in a money market account in anticipation of this.
Find Secure, Affordable Housing
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 relied upon two incomes for sustenance. Of course, there must be a balance between the need to live in a decent home in a safe environment versus having to put up with substandard housing. Be sure that you can afford to live where you choose to live; it is better to “downsize” in the short term, than to jeopardize the future financial security of your family.
Invest in Yourself
With the huge responsibilities you face, it can be easy to put yourself at the bottom of the priority list. Bring yourself to the top because that is important not just for yourself, but for your child. Get the skills, qualifications, certifications that you need to perform at your best and earn those salary increases and promotions that you deserve; or be in a position to set up your own business.
Invest in a network of proactive ambitious people that encourage you and help you grow. You are your greatest asset so keep investing in yourself.
Protect your Family with Insurance
Even if you feel confident that your children would be well cared for by their father, grandparents, or other family members, there are so many major financial considerations to plan for should anything happen to you so don’t ignore insurance.
As a single mother, health, life, education and disability insurance are crucial. As morbid as it may sound, if you are the primary breadwinner with dependent children, it is your responsibility to try to ensure that there will be some financial cushion should you lose your job, become ill or in the event of your untimely death.
A life insurance policy will help to replace and protect your income. It can also help to prevent your children from becoming totally dependent on the goodwill of relations or friends. In addition, it can provide legal guardians with the resources to care for your children and to ensure that they have the opportunities you would have wished for them. An educational policy will also provide benefits for the payment of their school fees and other incidentals.
By putting in place the right type and amount of insurance, you will have peace of mind in the knowledge that you are securing your children’s future. A rough rule of thumb is to buy coverage of eight to ten times your salary. Seek advice from a reputable firm; an agent will help you to determine how much and what type of insurance coverage will best meet your particular needs and situation.
Invest for the Future
Even with the huge demands of single parenthood, you cannot afford to prioritize only the financial future of your children and ignore your own financial needs and goals. By starting to plan and invest early, even a little amount put aside regularly over several years will accrue over time into a significant sum. The earlier you start saving for your retirement, the more you will have set aside to ensure a comfortable and secure retirement.
Write a Will
An estate plan is more important than ever for a single parent. A will provides clear directions about who will inherit your personal property, bank accounts and investments and who will execute your affairs after your death. Carefully determine who would be capable and willing to assume responsibility for your children. Also, ensure that they understand the full implications including the significant financial responsibilities that accompany legal guardianship.
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.
Unfortunately, it might not be in accordance with your wishes. You may also want to consult with a lawyer about setting up a living will which expresses your wishes if you become terminally ill or incapacitated, and a durable power of attorney to empower someone you trust to carry out your express wishes.
Don’t Overindulge your Children
As parents, it is generally our desire to see our children content. For single mothers, there is often the additional pressure to do everything possible to keep them happy. With pressure from TV, radio, social media and competitive parents, it can be difficult to navigate the minefield of excessive buying and spending, particularly for your children. This can be very damaging to not only your finances but to theirs as well. The last thing you need is a spoilt, entitled child along with all you have on your plate.
Don’t feel guilty about not providing all their “wants”. When appropriate, have an honest discussion with them regarding the family’s financial picture. As children get older, encourage them to start to save and earn some of their own spending money.
Don’t Feel Pressured to Live a Lifestyle You Cannot Afford.
It is so easy to compare yourself to others and start looking at all the two-parent families at PTA meetings and social events and stretch yourself to ensure that your children have everything and more. Stay focused on your own goals and don’t get swayed by a need to keep up appearances; yes, even for your children’s sake. There will have to be some conversations to help them with expectation but keep them involved with the family goals and the great things that you are working towards.
Single parenthood tends to feature high up on the list of life’s major challenges. However, with careful planning, a solid financial plan and proactive action to reach your goals; you can be confident in your ability to provide a comfortable and secure lifestyle for yourself and your family well into future. Financial security is a key ingredient for your ability to be the best that you deserve to be.
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]