Being a single parent can be an overwhelming experience on many levels. Not only are you responsible for parenting on your own, but you also may be the sole provider for your family.
The following tips could help you create a more secure financial future for you and your family and allow you to feel more at ease during the years ahead.
Prioritize your budget
The first step is to create a budget that supports your family. List out your must-have monthly expenses, including rent or mortgage payments, commuting, utilities, groceries and childcare costs, among others. Add your savings, retirement, investments and nice-to-have purchases, such as entertainment and vacations. Then, total your monthly income, including wages, child support payments, alimony or other money you can count on.
There are a few different budgeting methods you could try. Here are three:
- The 50-30-20 method: Divide your income into 50% for needs (essential expenses), 30% for wants (non-essential expenses) and 20% for your savings.
- Zero-based budget: Assign each dollar of your income to a role until you reach zero to ensure you know exactly where your money is going.
- Envelope method: Designate envelopes for your regular categories of expenses and put cash into each one. The amount you have in each envelope is all you can spend on that category until the end of the month or your next pay period.
Your budget may shift from month to month, and that’s okay. Being able to estimate your regular costs will give you a solid foundation.
Keep an eye on your debt
Paying down your debt as much as possible is another key step to securing your finances. If you own a car, one way to manage some of your debt is through a refinance car loan, which could change the length of your auto loan and the terms. Refinancing your car could help you lower your interest rate and your monthly payments, which in turn could free up more money in your budget.
You could also look into consolidating your debt with a personal loan or a credit card balance transfer. Otherwise, see if you can make small tweaks to your budget that would allow you to put more money toward your debt payments.
Save what you can
While it may be hard to set money aside every week or month, having savings to fall back on is an important part of looking out for your financial future. Even $5 or $10 a month will build over time. Putting your savings into a high-yield savings account can help you earn more interest than a traditional savings account. To make saving easier, you could set up an automatic transfer from your checking account every month.
It’s also a good idea to set up an emergency fund that’s separate from your primary savings account. This is an account you wouldn’t touch except in case of a job loss, urgent health matter, expensive home repair or other crisis. If your employer offers an emergency savings account benefit, you may be able to route a portion of each paycheck directly into that fund. Otherwise, you could set up an automatic transfer, just as you would with your regular savings account.
You might also look further into the future with retirement planning through a 401(k) or IRA fund. If your employer offers a 401(k) match, meaning they match your contribution up to a certain amount, take full advantage and contribute the maximum amount they’ll match from every paycheck. While you won’t be able to access your retirement savings until you’re 59 ½ — unless you want to pay a penalty — knowing the money is there could give you some peace of mind.
Ask for help
Being a parent is hard — raising kids takes a village. If you need additional financial support, consider reaching out to friends and family — or even a professional.
If you’re looking to build a better budget, get your savings on track or organize your future finances, an advisor or coach can be helpful. While hiring someone may be an additional cost in the short term, it could be a good long-term investment. Some nonprofits even offer financial coaching at low or no cost.
You could also look into setting up a 529 plan for college, which is designed to help you save money for your kids’ education tax-free. You might ask family members and even friends to contribute to it for your kids’ birthdays or holidays.
Estate planning could also help you provide for your family if anything were to happen to you. Speak to an estate lawyer about creating a will and organizing your assets to benefit your children.
Plan ahead for a more secure future
Being a single parent can be incredibly challenging — every day comes with new hurdles. But it can also very rewarding. As you work to provide for your family, keep an eye on your budget, pay down your debts, save what you can and ask for help if you need it.
Notice: Information provided in this article is for information purposes only and does not necessarily reflect the views of iotavalley.com or its employees. Please be sure to consult your financial advisor about your financial circumstances and options. This site may receive compensation from advertisers for links to third-party websites.
