I’ve heard it said many times that when you want something done well, find the busiest woman in the room and ask her. And most often, that incredible woman will be a single mom. So, it’s time for us to focus on what we can do to give these amazing women the support they so richly deserve by sharing 8 key financial tips for single mothers.
1. Control your finances—don’t let them control you!
Although the percentage of single women who are heads of their household is high, it’s still difficult to navigate as a single mom in a two-income household world. There’s no safety net and you are solely responsible for you, so you must set boundaries and live within a budget.
You might feel pressure to join in the fun of a girl’s night out. However, for a single mother, that could be an extravagance that isn’t necessarily affordable. You don’t need to isolate yourself, though, you just need to be honest when you cannot afford something.
Let friends and family know that you would prefer another activity such as a potluck dinner or simply grabbing a cup of coffee. You’ll be amazed at how many others feel the same way but were too embarrassed to say so, and you may even be a trend setter!
2. Needs vs. wants—the age-old battle we all face.
I won’t sugar coat it: You need to develop and embrace a budget! The ability to get real and stay real about spending will go a long way towards navigating the financial waters safely and will become your version of a financial life raft.
There are many good budgeting sites to work with, such as www.youneedabudget.com, www.mint.com and www.quicken.com. Before deciding which site to use to create a budget, keep in mind that they all rely on you doing your homework. Be honest about what you spend and begin tracking real living costs.
Review your spending every month and make adjustments as needed if anything gets out of control. For example, if you overspend on one category, such as eating out, cut back on another going forward, such as clothing, until you are back on track.
3. Create a support system.
Whether it’s family or close friends, let them know what you would find helpful as you navigate your finances and time management resources (which are often intertwined) as a single mom.
Since babysitting is expensive, perhaps you set up a babysitting co-op or ask trusted friends and family for a hand. Set up a clothing exchange and then expand that to kid friendly furniture, youth sports equipment and beyond.
4. Educate your children about financial literacy—model good spending AND savings habits. Consider investing.
Keep it real with your children about your financial circumstances and then model consistent and good fiscal behavior. Not only will you be keeping your family financially focused on what matters most and what is real and affordable, you’ll also be raising fiscally literate children with awesome skills and knowledge they can tap into during their adult lives.
Also, don’t lose sight of the fact that someday you will need to be able to rely on your own net worth to support yourself in retirement without becoming a burden to your children and others. Look into your company 401(k) plan and possible employer matching policies. Or, maybe you should fund an IRA or even Roth IRA to save for retirement.
When you’re first getting started, start small and then increase what you save monthly. As your circumstances improve and your children become independent, use new found cash flow to increase your contributions to investments and build your net worth.
5. Pay down debt, set up an emergency fund.
You may find yourself unavoidably in debt due to medical expenses, a loss of job or other completely understandable circumstances. As quickly as you can, focus on paying off unwelcome debt and building emergency reserves to help avoid the need for debt going forward.
Debt to buy an affordable car to get to work is not bad debt, assuming you have the income to handle that overhead. Also, an appropriate mortgage can be an example of good debt.
And while using your credit card points and rebates can be helpful, only charge what you can afford to pay IN FULL every month when those bills are due. Don’t be enticed to charge more than is in your spending plan just to get extra points and rewards.
6. Protect your children with life and disability insurance coverages.
Through work or using outside resources such as specialized insurance agents, you’ll want to obtain the best medical, dental and vision plans you can afford. You can also look into purchasing an appropriate amount of life and disability insurance to protect your children.
Keep in mind your biggest asset may be the money you haven’t earned yet, so do everything you can to insulate your dependents from the possible loss of you and your earning power.
7. Find the best paying career path you can and understand your REAL take-home pay.
If you are in a job that doesn’t pay enough after taxes and other employee deductions to allow you to provide for your family, you need to take steps to change that narrative.
Meet with local career counselors in your community and think about career options. Staffing firms are a great resource to help you become knowledgeable about your local job market. Become a LinkedIn maven and connect with anyone who can help you in your quest for the right job.
Consider attending community career fairs, talking to friends who have career paths that interest you or setting up informational interviews with those in professions that pay well to determine what steps you can do to make yourself an attractive hire.
8. You need an estate plan to protect your children.
Make it a priority to put your plan in writing and follow through by updating account titles, especially beneficiaries, on life insurance policies and all your retirement plans. You can reach out to your local bar association to find affordable resources in your own community or ask your employer if you have access to legal assistance through a benefit plan.
Even the best financial tips for single mothers are only as helpful as the actions taken. The common thread in these tips is: Prioritize. Plan. Proceed. Figure out the resources you have and those you need to acquire, and know you are not alone!
Take action on these tips by getting in touch a CERTIFIED FINANCIAL PLANNER™ professional in your community. And surround yourself with those who will elevate you as you move forward with your life and financial plans.