Financial planning for single mums
If you google ‘financial tips for single parents or single mothers’, you’ll get plenty of results. The goal of this piece however, is to give you some realistic tips of what is working and has worked for me as a single mother.
- Have a stable job
My assumption is that if you’re reading this, you’re already working and earning enough to provide yourself and your kid/s a fairly decent lifestyle. If not, please start looking for a job. I can’t emphasize enough how important this is. It’s not smart to depend on the amount that your ex is paying you as maintenance or alimony. There’s a good chance that you might even end up with peanuts or worse, nothing.
- Maintain a list of expenses
This is something I disciplined myself with from a very young age and it has helped me immensely. It helped me as a student studying abroad living on a shoe-string budget, as a newly married woman living a comfortable lifestyle and now as a single working mother. I would recommend creating a spreadsheet, I use a Google spreadsheet because it stays up-to-date and I don’t have to worry about losing the file in some drive. For each month, create separate columns for Food, Transport, House and Miscellaneous expenses. If you’re paying any EMIs, make that a separate column. Make it a point to update this sheet every day even if the expenses are minor. It gives you a detailed view of how you spend your money every month and if you need to cut down on anything or use certain amounts for other purposes.
- Invest for yourself and your children’s future
The rule of thumb when it comes to savings is that you set aside at least 30% of your income every month. If you’re able to save more, lucky you! But irrespective of how much you earn, it’s important you try to save this amount. There are several means and ways to invest your money. I would suggest approaching a trustworthy financial planner to help you allocate your savings to the right investments. In my experience, it’s important to take a few risks as well. Have a balanced portfolio of stable income equities and stocks. You can invest in tax-free mutual funds, PPF(Public Provident Fund), and for the more financially disciplined, SIPs(Systematic Investment Plans) are a great way of setting aside smaller amounts every month to achieve a goal such as your child’s education or marriage or a retirement plan for yourself. If you wish to be more cautious, you can put your savings in an FD(Fixed Deposit) or a RD(Recurring Deposit) with your bank. The advantages of an FD are more compared to an RD, but it’s still taxable. However, keep in mind the rate of inflation, you’ll find that the overall benefits of putting all your savings in a fixed deposit aren’t so great.
- Stay clear of loans
Don’t take up a loan unless it’s absolutely necessary. If you are already burdened with one, then try and close it at the earliest. The last thing you need as a single parent is a loan looming large over your head. Evaluate your needs. Learn to distinguish between a luxury and a necessity. For instance, you don’t really need the latest plasma TV for your wall.
- Purchase life insurance
Insurance is very different from investment. The goals are different. There are several LIC policies with low yearly premiums that provide a good cover in the event of a mishap. This is even more important if you’re a single parent.
- Spend on hiring help, if you can
While it’s absolutely crucial to save your money and invest in your/your kids’ futures, you can’t afford to not take care of yourself. If you are blessed with a reasonabe income or can afford to get more help with the kids or around the house, please do so. If you’re single and working, it’s not easy to raise kids and run a house. Pay a maid a bit more to do more chores or hire a cook to prepare your meals. This will give you more quality time with kids and time for yourself. In the long run, you’ll be a healthier and happier parent.