Children have a way of throwing your budget off track. And if you lose a spouse, your finances can derail at an alarming speed. Whether that looks like a rapidly draining checking account or growing credit card bills, the way you handle your cash flow when you’re a single parent changes.
If you find yourself losing control, it’s time to take back your finances and put your family on track for a secure future. Support for Stepdads offers the following financial tips for single parents.
1. Planning Ahead
When you have a family, one of the most important things you can do is to plan for the future, not only for your loved ones but also for yourself. If you don’t already have a retirement plan set up, it’s time to put one together.
Figure out your financial goals for the future, and make sure you’re putting enough away every month to reach them.
There’s also no time like the present to choose a life insurance policy, and, hopefully, your spouse left some money behind in one. You can get a decades-long, locked-in rate based on your current situation, and the younger and healthier you are, the better the rate will be.
Life insurance ensures your family has the funds to handle lost income, day-to-day bills, and even funeral expenses. So, you can rest easy knowing they’re covered.
Even if you received a payout from your partner’s death, you could add a layer of protection for your kids by ensuring your life, too.
For many, purchasing a home is an essential part of raising a family. If buying a home is a part of your financial plan, you’ll need to build up some cash reserves so you can afford a down payment and have enough income to cover monthly mortgage payments.
2. Honestly Assess Your Situation
You can’t fix a problem you don’t understand, so take a good, hard look at your current financial situation. This is especially important if you were not the primary money handler in your relationship.
Financial Highway explains many people find this stressful, but remember that looking at it doesn’t make it more real, but it does make you more aware.
Make notes to track how much debt you owe, what those monthly payments look like, and your minimum living costs per month, and compare that against your income and assets.
If first impressions are bad, don’t panic: by building and sticking to a budget, you’ll most likely discover areas you can cut costs and get your debt-to-income ratio back on track. You might need to go through your spouse’s email accounts to find any outstanding bills you were not aware of.
3. Build Your Budget
One of the most essential financial tips for single parents is budgeting . Build a monthly budget that covers and accounts for every single dollar you earn. There is software designed to help you through this, as you develop a spending plan that covers your needs first and wants second.
This doesn’t mean you have to spend it all. However, your spending and saving should be deliberate.
Split different forms of spending into categories, such as “Groceries,” “Bills,” and “Emergency Fund.” Then, plan exactly how much you want to spend in each of those categories. As Smartsheet notes, by setting specific and intentional goals, you’re more likely to temper your spending through the month, so you stay on track.
4. Stick to Your Limits
Setting spending limits isn’t going to do any good if you don’t stick to them. Track every single dollar you spend and check it against its appropriate budget category. Try to stay beneath your limit in every single category.
Not everyone’s mind works best going off a piece of paper or using an app or a spreadsheet – if it’s easier for you, you can go with the envelope method of budgeting. At the start of each month, fill labeled envelopes with the exact amount of cash you plan to use for that category.
When the envelope is empty, that’s it for that category for the month. You can even get wallets specially designed to help you stick to it!
As you get started with this, you might find your money isn’t distributed quite right. If, for example, you’re only one week into the month and you’re nearly out of grocery money, that’s a sign you need to either buy fewer or less expensive groceries or put more money into that category. It may take a few months to get all of your monthly spending goals straight.
You can also build up savings for your child’s education, future wedding, or first car. Spend some time thinking about what kinds of big financial moments you’d like to be able to help them with, and see if there’s anything you can set aside.
Remember, there’re even accounts you can open to help you set aside these types of savings, like a 529 for your child’s future college needs.
5. Consider Side Work
Lastly, if you already have a job but need to boost your income, side gigs or freelance opportunities can be a great way to pad your bank account. The beauty of side work is how flexible it is to choose your schedule or your own clients.
Common side jobs busy parents take on are babysitting, dog walking, starting a dropshipping business, or even starting a blog with Amazon affiliates for a passive form of income. As for freelancing, the possibilities here are also endless.
There is a need for a freelancer in just about every industry, from accounting to transcription services to healthcare to creative design to advertising and more. Find a job board, post a profile, and you’ll be ready to go!
Money can be a major stressor, but taking control will empower you to make the best choices for yourself and your loved ones. Don’t let your finances get away from you. Grab the reins and steer your budget right where it belongs.
It’s intimidating when you’re the lone coin master in your family, but you can do it. It just takes practice and these financial tips for single parents are a great way to start. Here’s a guide to debt elimination for single parents.
