Budgeting and financial planning are a challenge for many people regardless of their marital or income statuses.
The first thing that a newly-single mother should do is assess where she stands financially. She may have received a large sum, either as compensation after divorce or the death benefit of her husband’s life insurance policy.
The biggest challenge for single mothers is ensuring their financial security. In a country where financial literacy is poor, women score low on the awareness scale.
Here are five financial steps for single mothers to consider for maximising their money and having financial security.
1. Have confidence to control your finances.
Take the time to think about and plan for the future and have faith in yourself and your goals and dreams.
If you see that you are not doing something to reach your goals, work with someone who can help you do that. Everyone needs someone to talk to, especially about their financial issues because many people have fears about them.
It’s also a good idea to surround yourself with people who can keep you accountable yet support your financial goals and dreams. When it comes to manage your money, do some research and to get reliable advice from your family or close friends before you make any decision.
2. Review your monthly budget : Needs vs. wants – the age-old battle we all face.
In addition to maintaining self-confidence through the challenges and valleys, it’s critical to gain a clear understanding of your monthly spending.
Be honest about what you spend and begin tracking real living costs. Review your spending every month and make adjustments as needed if anything gets out of control. For example, if you overspend on one category, such as eating out, cut back on another going forward, such as clothing, until you are back on track.
3. Educate your children about financial literacy.
Keep it real with your children about your financial circumstances and then model consistent and good fiscal behaviour.
Help your children understand that happiness is available within your budget. Don’t be afraid to talk to children and be open about the reality of your financial situation. Engage them in discussions about living within a budget, which helps establish proper expectations.
Not only will you be keeping your family financially focused on what matters most and what is real and affordable, you’ll also be raising fiscally literate children with awesome skills and knowledge they can tap into during their adult lives.
4. Pay down debt and set up an emergency fund.
As quickly as you can, focus on paying off unwelcome debt and building emergency reserves to help avoid the need for debt going forward.
5. Protect your children with life and disability insurance coverage.
Through work or using outside resources such as specialised insurance agents, you’ll want to obtain the best medical, dental and vision plans you can afford.
You can also look into purchasing an appropriate amount of life and disability insurance to protect your children.
As a single parent, being responsible for everything including your finances can be a very heavy burden to carry. With that being said, taking the time to address the points above will ultimately help you have financial peace of mind as well as a stronger financial future for you and your children.