Family is a social institution that ensures the availability of all the required four resources – Time; Social; Environmental; Financial – for raising productive, responsible and happy members of society. Raising kids as a single parent is challenging for both men and women, as it essentially means assuming the responsibilities of the counterpart as well. But things get much more complex for a single-mom due to the existence of discrimination in our societies; so here are some financial tips for single moms.
Some Reasonable Financial Tips for Single Moms
Though, as a wife and a mother, every woman is already engaged in some sort of financial activities but as a single mother, you’ll have to get into the driver’s seat and understand the financial management process as the first step to manage it successfully.
Like any other individual or family unit, you’ll face two main categories of financial decisions:
- Acquisition of funds; and
- Utilization of those funds in the best interest of your family.
The overall financial management process for a family and for an individual irrespective of gender is much similar to that of a business which includes typical planning, organizing, controlling and monitoring financial activities like budgeting and forecasting, saving and investing, lending and borrowing.
The way you’ll prioritize and plan your financial activities will considerably be different due to your situations. Take a step further to know where you’re right now.
Assess Your Current Financial Position
As a prerequisite of financial planning determines your net worth – home, vehicles, valuable jewellery and financial assets (cash, bank accounts, lending, bonds or any other investments). Deduct your financial liabilities (credit card balances, pending bills, debts, lease payments in respect of your car or house etc.) Also, consider if you’re to receive any legacy or alimony or subsistence amount. Take into account all of your income sources and support options available to a single mom in your country from government, social institutions or friends and family.
Having all this information will reveal your lifestyle & financial status and shape your decisions as to how to acquire funds and where to utilize those funds. It will help you in goals selection and funds allocation for example:
- Paying off an interest-bearing debt should take priority to less urgent goals like replacing home appliances.
- Allocating more funds to saving and investing goals instead of spending on wants to avoid financial distress.
Develop and Follow a Comprehensive Financial Plan according to your Unique Circumstances
Setting and pursuing financial goals is different from providing for routine household expenditures in a budget. Make a careful budget which provides for every member’s basic needs including health and education.
Establish spending, saving and investing goals for the overall welfare of your family. These goals must be specific, measurable in monetary terms, attainable, realistic, and attached with a Time horizon considering financial risks and future life events. Developing SMART goals increases the chances of achieving those goals.
Which specific goals a family sets and how it raises and allocates required funds needed to achieve those goal depends on the structure of a particular family, its lifestyle, and its social and financial status.
Brainstorm and Work upon Smart Goals
Short-term goals that you want to achieve within one or two years’ time e.g. adding a new skill to your and your children’s skill profile, replacing household furniture, buying a new car, investing in government bonds or going on a family vacation.
Long-term goals which will take more than five years to be achieved e.g. your retirement plan, or your children’s college education and marriage, buying a business or a home.
Prioritize goals objectively such as purchasing a new car can comfort you and your family by saving your energies wasted daily on rushing for public transport, thus, increasing your work capacity and family time; but leasing an expensive car will put an unnecessary financial burden on the whole family.
Funds allocation to goals that increase your earning capacity must be preferred over non-productive purposes like buying luxury products. The best investment is to invest in your children’s and your own education and skills. It is advisable to increase your savings to create an emergency fund and other funds related to specific goals.
Link appropriate source of funds to the expense in consideration. Routine and recurring expenses should be met out of the regular source of income, and occasional income could be used for an irregular expense like a short recreational family trip.
Money-management software and websites can be used for managing personal finance plan. If your status allows, you may consider taking financial planner services; but do keep in mind the cost of service should be significantly lower than the benefit derived.
Don’t forget to regularly track and review your spending, saving and investing goals; update and adjust your budget whenever needed.
Some General Recommendations for Financial Relief
- Build your relationship with trusted family members, friends, colleagues and neighbors; give them monetary and non-monetary favours whenever possible and ask them for help whenever you need it.
- Get over your insecurities of being not enough for your children; if not, you’ll find yourself into wasteful spending to prove your love.
- Consider availing support options from different institutions and taking insurance coverage compatible with your goals.
- Neither be stingy nor extravagant; moderate spending leads to a stable lifestyle which ultimately helps uplifting it.
- Involve your children in the financial planning process and engage them in relevant financial activities according to their age.
- Never take interest-bearing debt for wants or luxuries and consider using a debit card instead of a credit card.
- Support DIY activities.
The way you manage financial activities will influence the quality of other aspects of your life i.e. parenting, housework, children’s education and their social life. Truly it’s going to be twice the work, twice the stress and twice the tears but twice the pride for you. These were some of my inputs as financial tips for single moms.