Crucial Financial Planning Tips For Single Mothers

By BankBazaar | March 26, 2018

Are you a single mother? Looking for some money-management tips? You’ve come to the right place. Read on!

Crucial Financial Planning Tips For Single Mothers

Being a parent isn’t easy. And being wholly and solely responsible for everything related to your child is even harder. It all comes down to your management skills. Whether it’s a decision related to your child’s education or something that can determine their future, it’s all up to you. If you have a fair understanding of your child’s needs (current and future), half your work is done. What’s left is the planning part. And trust us, that isn’t too difficult either.

Additional Reading: How To Teach Healthy Financial Habits To Your Kids

Before we begin with some crucial financial planning lessons for single mothers, we want you to take a moment to pat yourself on the back. It’s quite a challenging task and you should be proud of yourself for handling things so well.

Before giving you tips on planning your money better, let’s analyse some of your common financial issues (as a single mother).

  • Budgeting Woes

Sometimes, not being able to decide where to and where not to spend can wreck your monthly budget. As the sole breadwinner of your house, it’s entirely your duty to get that budget right. The best way of doing that is by working on your money-tracking skills.

This might be slightly time-consuming and you might have to maintain a diary for record-keeping. But this simple act of making a note of all your expenses can prove to be really helpful, especially at the end of the month. That horrible time when no matter how hard we try, we struggle with money. To end that struggle, you need to prioritise well.

Classifying things under different categories (according to the priority) can be helpful. That way, you will know exactly what needs your immediate attention (money-wise) and what can wait for later. For instance, if you need to pay your child’s coaching fees, you need to plan ahead and give it priority over that new sofa set (no matter how comfy it looks). Knowing where to spend and where not to can simplify things for you.

Additional Reading: 5 Reasons Why You Need A Budget For Your Home
  • Emergency Fund? What’s That?

Still, haven’t thought about it? If you don’t start early, this could become one of your biggest concerns later. Even if your monthly contributions are small, don’t forget that they’re still significant. The size of the monthly contribution doesn’t matter as long as it’s consistent.

Kids often keep getting small cash gifts from relatives. That’s one thing you can start building your emergency fund with. It’s a good start, but it’s not enough. Apart from putting all the extra cash into this fund, you need to make some regular contributions as well.

Why so? Well, a decent emergency fund can help you out in tough times and can prepare you for a financial downfall. Instead of depending on your friends or relatives for money, you’ll have the option of relying on your contingency fund. Building it can be quite cumbersome, but once it’s ready, you have no reason to worry later in life.

Additional Reading: Tips To Handle An Emergency That Costs More Than Your Emergency Fund
  • Credit Overload

Credit isn’t bad, but letting it grow beyond your limit isn’t good either. Overusing your plastic buddy is a big no-no. As a single parent, your Credit Card can be your best friend in tough times for all those unforeseen expenditures. But you also need to remember that not keeping up with the credit can create havoc with your finances later.

If you have a loan or two, it gives you more reason to be careful about how much you’re borrowing and from where. Comparing interest rates and getting the best deal should be your priority.

Additional Reading: 5 Things To Know About Credit Card Loans
  • Childcare Expenses

Raising a child is an expensive affair. Apart from meeting their daily needs, you also need to think about their education. With inflation rates rising by the day, even basic pre-school education has become exorbitant. If you don’t start planning and saving ahead of time, it could become a problem later.

These are just some of the financial troubles you could be facing as a single mother. We’re sure there are a lot more though. But, worry not! With the right planning and decision-making, you can easily sail through the tough times and enjoy every moment possible with your children.

Additional Reading: A Financial Guide For Women Dealing With Divorce

Here are some crucial money-management tips you must keep in mind:

  • Early Lessons Go A Long Way

Apart from investing in the right places and ensuring that you do everything right for your child’s future, you also need to give them some crucial lessons on money-management. If you start teaching them early, it can really change the way they think about money.

For instance, instead of letting them waste their pocket money on chocolates and toys, you could teach them how to utilise it better. You can teach them the importance of prioritising their expenses. This knowledge will go a long way and will also help you save better.

How? Once your kids understand the value of money, their list of demand will automatically decrease. If you have teenagers, they’re likely to come to you for the financial help. Giving them a Credit Card without thinking about the repercussions might not be the best decision.

Teach them everything about the proper utilisation of these cards. It will certainly help them in the long run. They’ll get the knack of money management and will also get to build a good Credit Score.

  • Consider All Expenses

We’re sure that you start your month by creating a budget and sticking to it throughout. In case you don’t, you must start this month. While preparing your financial plan for the month, you must remember taking the ‘extra’ expenses under consideration. What are these extra expenses? These include all those visits to the movies, amusement parks and other entertainment related activities.

They are kids after all. Let’s not forget that. They might not be able to curb their temptations all the time. So, it’s better you make some room for their wishes (which, sometimes, can be quite expensive). To assimilate their demands in your monthly budget, you need to master the art of budgeting.

Additional Reading: 6 Tips To Save Money In Day-To-Day Life
  • Too Many Loyalty Cards? Time To Give Them Up!

We know how high you jump when someone offers you free loyalty cards. Those extra rewards points make your heart skip a beat. No matter how attractive all those rewards points seem, we all know that they’re ultimately a trap. A trap to make you spend more than you actually would.

That doesn’t mean that you should completely flush all these cards out of your life. If you’re a regular at some grocery stores, maybe these cards make sense for you and help you save a few bucks as well. But don’t take loyalty cards from every other shop. Remember, they are meant to help you save more. It shouldn’t be the other way round.

Additional Reading: Myths About Credit Card Rewards

Since you’re the sole breadwinner in the family, it’s your duty to think about the financial stability of your children. Life is uncertain. In case of an emergency, they should have a well-defined way of getting enough money to meet their expenses. This becomes all the more important if your kids are too young to start working. In that case, their financial future completely depends on your planning. Investing in a Life Insurance policy, therefore, makes sense.

  • Automate those savings. Right now!

These days, we’re all so busy that we keep looking for more and more ways to automate everything. Whether it’s something as small as grocery shopping or investing in property, we start by looking at ways of doing it online. Convenience is all we want and automating things to achieve that makes total sense.

When you keep looking for simpler and more effective ways of doing everything, why not do the same for your savings? We’re talking about opting for auto-debit. Open a Recurring Deposit and see your money grow. All you have to do is set a savings target, select a fixed amount that’ll get auto-deducted from your Savings Account and that’s it! You’re done.

It’s the simplest way of watching your money grow. You can opt to start slow and these small contributions can build a good amount over time. Just be patient and trust the magic of the auto-debit option.

  • Part-time Jobs. Yes, They Work.

Not just for you. Of course, you can look at part-time jobs to take care of your extra expenses, but we’re talking about your kids. ‘Why would I make my kid work part-time?’ If this is the first thing that popped in your head, we can explain! Working a part-time job not only increases the overall family income, it also teaches your kids a couple of crucial money lessons.

What can help them prepare for adulthood more than going out there and earning a few bucks? Moreover, they will learn to be self-sufficient and that’s quite a lesson.

  • Be Aware, Always!

No matter what, you must always know what your current financial position is. Run quick checks on your money regularly. Don’t wait for your salary to get credited. Remember that you have people to think about who are completely dependent on you. In case of an emergency, you must be prepared to handle things and run your household as smoothly as possible. This is when maintaining that budget will come in handy. Keeping a written record of your cash inflow and outflow is quite useful.

Additional Reading: Household Budgeting For Homemakers

Phew! Running after those kids all the time isn’t an easy thing to do. There’s so much more to getting your parenting game right. You need to plan your finances such that your kids get to enjoy the best of everything. Achieving financial independence and balancing your finances isn’t that hard. You just need to keep the needs (and demands) of your children in mind and plan accordingly.

No financial crisis can affect you as a single mother as long as you combine well-informed choices with careful planning. Need better ways of securing your child’s future? Why not try Fixed Deposits?

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