6 Financial Planning Tips for Single Parents

Budgeting and financial planning are a challenge for many people regardless of their marital or income statuses. As a single mother, however, you simply have no room to make mistakes. You have small lives who are dependent on you for their well-being and their future. You must find an effective way to budget on a monthly basis as well as to prepare for the future. When you learn how to budget as a single mom and how to prepare for the future, you will be able to more successfully and enjoy a less stressful future with your kids.

PURCHASE LIFE INSURANCE

Savvy financial advice for single women also focuses on purchasing life insurance. There are various types of coverage that you can buy, such as term and whole life. The death benefits can be used to pay for your funeral as well as to support your children if you die financially. They can also be used to fund their college education. You can use a life insurance calculator to estimate the ideal proceeds that you need based on your current financial situation. Buying term life insurance is one of the best steps you can take to care for your kids after you pass, so you should include life insurance premiums as a necessary expense in your budget.  (Did you know you can purchase term life insurance online from Bestow?)

• Read: Term Life Insurance vs. Whole Life Insurance — Which is Right for You?

DEVELOP A LONG-TERM BUDGET

Understanding how to budget as a single mom can be complex, but it is critical that you succeed in this effort. A solid and thoughtful budget includes all recurring and non-recurring expenses for a month. As a single mom, your income may vary from month to month, and some sources of income may not be reliable. For example, your ex may unfortunately not pay child support on a regular basis, and this can make it difficult to budget properly. Your budget should take into account reliable sources of income. Your budget should also be projected out over several months or even over a full year. This will help you to determine when cash flow issues may arise, and it gives you weeks or even months to plan a strategy. Consider holiday and birthday presents, if the kids need braces and other non-recurring costs as you prepare your budget.

• Read: Our Printable Budget Binder (A Plan for Every Dollar)

ESTABLISH A RAINY DAY FUND

Regular savings is critical for single women, and you should adjust your spending habits so that you can afford to save regularly. As a first step, establish a rainy day fund. You may be well aware that costly expenses can arise unexpectedly in life. While you cannot know when they will occur and how much they will cost, you know that future events will inevitably occur that can cost a small fortune. You simply must have a plan in mind for paying for these expenses if you want your budget to stay on track. A rainy day fund provides you with the financial plan you need. You may begin by saving as little as $25 per pay period, but save more if you can. Over time, this account balance will grow to a healthy amount. Ideally, you want this account to have at least six months of your income in it.

• Read: How to Build an Emergency Fund (Step-by-Step Guide)

PLAN FOR MEDICAL EXPENSES

With kids, medical expenses are unfortunately common. Everything from well-checks and sick visits to emergency room visits and more can add up. You must have health insurance in place, and you can purchase your own policy if you cannot obtain coverage through your employer. The premium should be a regular part of your budget. Also, allocate a portion of your budget toward your co-pays, prescriptions and more. If you happen to go a month without a doctor visit, you can easily enjoy having extra money in your budget. However, if you do have these expenses, you will be happy to know that you have budgeted for them. By planning for these everyday expenses, you can avoid having to consider them as stressful, unexpected expenses.

• Read: 4 Financial Moves to Make Before Having a Baby

PREPARE FOR THE END OF LIFE

It can be difficult to consider estate planning for children when you can barely make ends meet, but it is nonetheless important to start at the worst-case scenario when preparing your financial house. The bottom line is that everyone will pass away at some point, and you simply cannot determine ahead of time when this will happen. You must be prepared for the care and financial well-being of your children when the time comes. Will and estate planning should include details about who will look after your kids, how your assets will be allocated and when your final assets will be passed on to your children. Also, it also must include a power of attorney regarding your healthcare decisions in the event you are unable to make the decisions yourself.

PREPARE FOR RETIREMENT

Many single women stress about their inability to save as much money as they would like to fully. After your rainy day fund has been established, you may wonder if you should save for retirement or the kids’ college education. Both require a healthy amount of money to pay for. As a mother, it can be difficult to make a selfish decision to save money for yourself when you know your kids will need money for college. However, prioritizing retirement over college is critical if you do not have money available to allocate to both. Consider that your kids can use grants, scholarships, student loans and even money from a part-time job to pay for college. You, on the other hand, will have no ability to borrow money for retirement. You must fund your own retirement plan because there is no other option available. There will come a time when you no longer want to work or when you are no longer able to work, and you must financially support yourself.

• Read: Retirement for Beginners – Traditional IRA Explained

As you can see, there are many aspects of financial planning that single mothers need to consider. While you want to improve your budget so that you can more easily make ends meet now, you also need to plan for the future in various ways. You may need to trim down your current spending so that you can pay for life insurance, retirement savings and more. However, by taking these steps today, you can rest easy knowing that you and your kids will be provided for now and in the future.

About the author: Riya is a content strategist. With spending her years in marketing communication, Riya is delighted to work with aspiring small business owners. Riya works as a content strategist at Queensland Estate Lawyers, a specialty firm in will disputes and administration in QLD, Australia. She enjoys meeting new people and reading more books to get inspired for her own work. Her Twitter, @sanderriya.

Save

Save