According to a recent Census Bureau release, in the U.S., 23% of children live with a single parent. Although it may seem that single parents have double the work, you may also have double the love. One key to navigating a single parenting life is to create a financial plan and stick to it. Working with a CERTIFIED FINANCIAL PLANNER™ professional can be a great way to start reaching your financial goals.
Here are some financial strategies for single parents:
Be a Role Model
It has been shown that money can build or destroy relationships. This is partly a result of the short-sightedness of parents forgetting to pass on positive values about money to their children. A child's financial DNA is built in their first years of life, so be sure to show your children that money can be a positive force in the world if handled responsibly.
Teach Your Children How Money is Made and Earned
It is never too early to understand that money does not grow on trees. This concept can help align your child’s expectations with yours when it comes to choices for the future. During conversations with clients, they express how they were given money throughout their childhoods but were never shown how it was made. Although there are kids in their teens who are successful entrepreneurs, not every child has opportunities to make money. As the keynote speaker at a recent money workshop, I asked whether the attendees’ parents had told them money was something hard and difficult to make. The majority of the 200 attendees raised their hands. Let your children know that while getting money may not be easy, it should never be a stressful activity.
Involve Your Children in Your Finances and Plan Together
Some of the most stressful times for single parents are spring and winter break. While you want to give your children the best experience, you also have a limited budget. Involving children in decision-making is key to ensuring you both are happy. For example, if you have $1,000 set aside for vacation, negotiate whether to go to a theme park in March or in December, and discuss the pros and cons of each option. It can be a good exercise to start putting money toward their 529 Education Savings Account and track it periodically to show them how much it is growing toward your goal.
Be Disciplined with Your Budget
Avoid giving in to whims that can take you off track. Small children are cute, and it is hard to say no to them. However, saying, “yes,” to everything will only lead to a lot of harm for children when they grow up and are out in the real world. Remind children that you must budget for their college years, too.
Take Care of Yourself First
Focus on your retirement plan (if you are self-employed, contribute to an IRA, if not max your 401(k)) before you start planning for your children’s college years. A wise psychologist once told me that to make someone happy, you must be content with yourself first. One way to help do that is to create a financial plan with a CFP® professional and ensure it is updated annually.
To find a CFP® professional to assist you in reaching your financial goals, visit LetsMakeAPlan.org.