Being a single parent is no walk in the park. One income to support a family can prove challenging at times, especially when it comes to budgeting, saving, and paying off your debt. However, we take an in-depth look at how you can manage your finances as a single parent as effectively as possible.
The good news? You are not alone.
According to Gingerbread (a leading single-parent family charity organization), 67% of single parents struggle to manage their finances.
DO NOT fall prey to these statistics; manage your money the right way. There are small changes you make today that can change your life. We’ve put together the top money management hacks to help single parents like you make the best financial decisions for you and your family.
- 1 Great Hacks for Single Parent Finances
- 2 In Conclusion
Great Hacks for Single Parent Finances
#1 Take Charge of your Finances
You are the sole breadwinner and adult in your home. It is your responsibility to manage your finances and provide for your family.
To get started, there are three important things you NEED to know:
- Your income (how much you’re bringing in every month)
- Your expenses (where your money is going)
- Your limits (know when to stop)
Once you know this, you’re a step ahead in planning your budget.
#2 Focus on your Necessities First
You would love to provide your children with everything they want, but it’s more important to have everything you need.
Yes, you may be tempted to get your children that latest Samsung cellphone that they’ve been dreaming of, but is it essential? Do you have enough extra funds to spare?
Do not feel guilty! You need to be able to differentiate between your needs and your wants. Write down a clear list of necessities, like food, water, rent, education, etc., and focus on those.
One day when you are financially stable and secure, you will be able to spoil your children with whatever they want. But right now, you have to cut down your spending and SAVE!
#3 Learn How to Say NO
Many people don’t know how to say no. This is the root cause of extra spending and getting knee-deep in debt.
Do these situations sound a little familiar?
When you’re out with your friends, only pay for yourself. Don’t be a hero and offer to pay for everyone else when you know you can’t afford it.
Stop looking at how other mothers on Instagram live luxurious and carefree lives because, in reality, this kind of lifestyle is unaffordable for most single moms. It would be best if you lived a life you can afford.
We all hear the term “budget” being thrown around, but how do you make an effective one? Financial Analyst Insider Lou Haverty highly recommends a top budgeting rule to help get your finances in order.
The 20/30/50 budgeting rule is a simple but highly effective budget plan. So, how does it work?
Firstly you need to separate your after-tax income into three buckets:
- The 50% bucket (NEEDS, all essential expenses like groceries and rent, etc.),
- The 30% bucket (WANTS, these are not necessary like vacations, eating out, etc.),
- And the 20% bucket (SAVINGS like for retirement, future goals, etc.).
#5 Invest In YOU
Did you know that investing in yourself could help you earn more? Wouldn’t you like to become self-sufficient?
You need to understand that you come first, don’t feel guilty about it. If you are not fine, your children will not be fine.
Focus on your skills and talents, grow professionally by learning new skills, and ensuring that your qualifications are complete. This will help you secure a top-paying job, meaning you can provide more for your family.
#6 Get Rid of Your Debt
Paying off your debt is one of the biggest challenges a single mom could ever face. It feels as if you’re drowning with no way out. But rest assured you can make it, and we’ve got proof.
Rebecca Lake, a single mom, paid off her debt, saved money, and improved her credit in 5 years.
Here are some of our debt relief tips:
- Gather all your bills every month (utilities, etc.). and pay them at least a week in advance.
- Start small- pay all your creditors a small amount every month. Even if it’s just $7 each, something is always better than nothing.
- Pay extra when you can- as you earn more, you can start increasing the amount you pay to your creditors every month.
#7 Find Ways to Bring in Extra Income
No one knows how to multitask like a single mom. Use this to your advantage to bring in extra income to help pay off your debt and save towards a brighter future.
Consider finding a part-time or work-from-home job that isn’t demanding but brings in the money. Many single moms out there have started blogs that blew up the internet and filled their pockets just by sharing their stories.
Be creative; anything is possible.
#8 Take Advantage of Government Benefits
Did you know that the government provides several benefit programs, especially for single parents? Apply for any government benefit programs that you are eligible for!
This will help drastically cut your expenses down and give you a little more room for savings.
TANF (Temporary Assistance for Needy Families) is a great example of a government benefit program that can assist you with covering childcare, job preparation, and emergency costs.
#9 Investing is Everything.
Have you ever heard that diversification is key when investing? This basically means avoid “putting all your eggs into one basket.” But bear in mind that you should not exceed more than 30 investments.
Get started by asking yourself the following:
- How much would you like to invest?
- How often will you be adding to these investments?
Now let’s take a look at the essential investments for you.
Retirement investments will help you remain independent even when you are no longer working. These investments are even more important than investing in your children’s college. Because you cannot borrow money for retirement, but you can for college expenses. There are unlimited resources and grants available to help you pay for your children’s cost of college.
A key factor to include in your retirement investment is saving your long-term health costs. The best way to estimate your future health care expenses is to look at your family history, for example, what illnesses run in your family?
Life insurance protects your children should something ever happen to you (God forbid). It allows them to be taken care of even when you are no longer around. As a rule of thumb, this should be 10 times more than your annual income.
529 Plans are tax-advantaged investment accounts that help you save towards your children’s tuition or college. It would be best if you only started this investment after saving towards your retirement. The 529 Plans are among the most powerful savings strategies for single moms because the money grows tax-free in this investment.
The best part? There’s no tax on withdrawals either.
Finally, we hope that this article gave you enough insight into better managing your finances as a single parent. For more information, financial advice, and other tips, check out our pages on budgeting for single moms or loans for single mothers.