For single parents, managing finances can carry significant stress, concern and worry. Stretching one income to provide for your family is important, and knowing how to do it effectively, without getting stressed out, is even more so.
Here are some tips from financial experts to help you better manage your finances so you can devote more time to your children instead of your financial statement.
There are plenty of challenges, including financial ones, that present themselves to single parents. Developing a balanced strategy to meet your family’s financial needs can significantly reduce the concerns that may arise in the future. Laura T. Coffey of Today Money offers some ideas to consider to help:
- Evaluate your current expenses. Your money is likely going to a lot of different places, from health insurance to child care to education. Start by figuring out how much goes where and whether there are any areas that you can simplify or cut back on.
- Explain money so your children can understand. Start teaching your children early on about money and spending so they can learn how to manage money responsibly. This may also help curb family spending.
- Look into tax breaks. As a single working parent, you are likely eligible for certain child care tax credits, allowing you to deduct up to $3,000 in day care bills for one child. Do your research about any other tax breaks that you may be able to take advantage of.
- Tap into local resources. Instead of buying books and movies for your kids, stop by your local library, where you can borrow and return. Visit consignment shops for less expensive clothing for both you and your children.
- Save for the important things. Regardless of areas that you might be able to cut back on in day-to-day expenses, don’t cut back on saving for college and retirement. Even if you start by setting aside just a small amount on a regular basis, your savings will add up over time and make a big difference in the future.
- Get your estate plan in order. More than anything else, it’s important that you establish a legal guardian for your children and a plan for how you would want your finances distributed should something happen to you.
According to a 2010 study by the Department of Agriculture, raising a child costs an average of $226,920.
“Single parents are now the only head of the household, and have to calculate their finances to make sure family member’s needs are being met with diligent budgeting and planning,” states Andrea Murad of FoxBusiness.com. Murad goes on to offer some additional tips to consider as you develop a financial strategy for your family:
- Set a budget. With only one income, you need to be even more conscious of your spending. Use software such as Excel or Quicken or other budgeting tools to help you stay on track.
- Create a safety net. There will always be times when you will need to spend more than you have budgeted, whether it’s for a family emergency, a child’s field trip or repairs around the home. To protect against unexpected situations, build an emergency fund that can cover up to nine months of living expenses.
- Don’t forget to take care of yourself. By taking care of yourself, you will be able to better care for your family. Make time for yourself—your needs and wants. Look into finding a network of single parents in the area whom you can lean on for support.
You want to provide for your family in the best way possible. Being a single parent doesn’t mean you have to sacrifice your family’s happiness for financial stability. Taking steps to manage your money wisely and effectively can make all the difference.