“A good plan executed violently now is better than a perfect plan executed next week.” – George Patton
Being a single parent is not easy. You carry the full responsibility of providing for your child(ren) all on your own. This can be overwhelming, especially in terms of managing finances.
However, proper planning can help in achieving financial independence for single parents despite the difficulties. To help you with the same, this article will cover how to manage single parent finances.
Why do single parents need to plan their finances?
In India, single parents face multiple challenges like social stigma and difficulty in emotional regulation that further intensifies the financial burden. As a result, achieving financial independence becomes crucial. Here are a few more reasons that should be considered:
Lack of finances causes constant worry for single parents struggling paycheck to paycheck. By achieving financial independence, single parents can feel peace of mind amidst other demands.
Focus on parenting
Being financially stable allows more energy and resources towards caring for the child, their development, education, and future.
Improves quality of life
Single parents bear expenses like childcare, healthcare, housing, taxes, and other costs all alone and often end up in debt. Financial freedom as a result gives them a breather and a chance at living a better life.
Single parents who attain financial independence are less likely to depend on their kids at a later stage of life. This gives the next generation room to grow without any worries for parents.
As a result, solo parenting finances matter. Single parents should spend money wisely, try to earn extra income and prepare for the future.
Take control of your money rather than letting it control you.
Steps to safeguard your and your child’s future
To achieve efficient financial planning for solo parents, specific actions must be taken to manage money wisely. Here is a step-by-step guide to fulfiling your long-term financial goals.
Make a Budget
A financial plan or a budget allows you to align your income and expenses and adjust where needed. Budgeting for single parents includes accounting for sources of earnings, expenses, assets, and debts if any.
You need to include childcare costs, healthcare expenses, groceries and household items, rent/mortgage, utilities, insurance, transportation, clothing, entertainment, debts, child support received/paid, and taxes for making a budget. You can also visit different online portals for single-parent budgeting advice. Revisit and revise your plan quarterly.
Sticking to your budget requires regular monitoring of your expenses. Use expense-tracking apps or record all expenses on a spreadsheet. Analyse expenditure patterns over the past 3-6 months to catch problem areas of overspending. Review bills and statements each month to avoid late fees. Saving receipts also helps track where the money goes.
This consistent monitoring allows you to find places to cut back if needed or where you have room to allocate more funds toward essential goals.
High-interest personal loans, credit card debt, and late bill payments can create a debt spiral which can be difficult to escape. This unnecessary debt burden only magnifies your financial struggles.
If you are currently in debt, pay it down aggressively each month if possible. Consolidating debts to lower interest rates, and effective debt management for single parents can help.
For future expenses, consider what you can realistically afford to pay off that month. Live frugally to begin eliminating debt and saving simultaneously.
You need to focus on two types of insurance as a single parent.
- Life Insurance: It ensures to protect your child(ren) if anything happens to you. It can pay for education expenses, bills, mortgages, etc. This guarantees that in the event of a disaster, your children will be financially supported.
- Add-on term Insurance: It provides extra financial security for both parent and child. This can help secure your child’s future not only in case of demise but also in other unexpected circumstances where you are incapable of providing for your child.
- Health Insurance: It protects you from medical inflation and provides quality treatment and facilities in the need of the hour. Family floater Health Insurance and Critical illness policy are some plans to consider for single parents.
Investing as a single parent may seem daunting in the beginning. Start risk-free investments like fixed deposits to multiply your savings. Government schemes like the Provident Fund (PF), National Pension Scheme (NPS), etc. can be useful here.
Even a small amount invested early can yield good returns with the power of compounding. Invest in equity or mutual funds. You can also start an SIP where you can pay monthly, quarterly, half-yearly, or annual payments according to your income.
Focus on creating a balanced portfolio as per your risk profile and long-term investment goals.
Passive income sources
Passive income supplements your regular earnings. This additional income for single moms/dads helps cover monthly bills or fulfils savings goals.
Potential options for career growth for single moms/dads include revenue from rental properties, selling digital products online such as eBooks or courses, monetizing a blog through ads or affiliates, creating YouTube videos, selling photos, or launching an online business.
In today’s digital time, side hustles for single parents are a potent way to achieve financial freedom. Tap your skills and interests to start earning beyond your 9 to 5.
Build an emergency fund
Savings are vital during emergencies such as job loss, health crises, and unexpected expenses. In this regard, safekeeping an emergency fund for single parents becomes a lifesaver.
An emergency fund helps you to face unexpected financial shocks in the future in case of sudden accidents or emergencies. Aim to have 6 to 12 months of income saved up as an emergency fund.
Attaining financial freedom as solo parents requires strategy, diligence, and an ongoing commitment. The above guidelines help to achieve financial independence for single parents. Taking definitive steps allows you to thrive now while also building a stable future for your children.
Monitor your money moves, create a realistic budget, spend wisely, and invest for the long haul. You’ve got this! To know more, subscribe to StockGro!