Article

Becoming a Financially Savvy Single Parent

Becoming a Financially Savvy Single Parent

Providing for your family, on your own, doesn’t have to feel like a never-ending cycle of living paycheck to paycheck. Even though there are challenges with the work involved in earning a living and care for children, your finances can be managed with very careful planning and even allow you to save for the future.

March 12, 2023
Becoming a Financially Savvy Single Parent
Important Disclosure: Content on our website and in our newsletters is for informational purposes only. The information provided may (or may not) directly apply to your situation. We recommend that readers work directly with a professional advisor when making decisions in the context of their specific situation.

Raising children without a partner can be challenging – emotionally, physically, and financially. Challenged by the work involved in earning a living and caring for children, single parents can sometimes feel that they may never break the cycle of living paycheck to paycheck.

But, even if you have a limited income, you may find that simply managing your money better can alleviate some financial problems and allow you to save for the future. Consider the following steps toward becoming a financially savvy single parent: 

Analyze Your Expenses

The first step is to take stock of your situation. What are your fixed costs? How much do you pay for housing, utilities, transportation, and childcare? If these expenses alone consume most of your income, leaving you with little money for groceries or discretionary spending, consider whether some of these costs could be reduced or eliminated entirely.

If your mortgage, property taxes, and utility bills are more than you can reasonably handle, selling the house and moving to a smaller place may be an appropriate option. It may be difficult for you and your children to leave the family home, but the prospect of having more money to spend on other things may make it worth it. Similarly, it may make sense to trade in that late-model sport utility vehicle for a more fuel-efficient or used vehicle.

If you need childcare while you are at work, there may be ways to reduce your costs. Daycare centers are often more expensive than programs offered by local religious institutions or YMCAs. If your children only require after-school care, a stay-at-home parent may be willing to help out in exchange for your babysitting services at other times. You may also want to speak to your employer about working a flexible schedule or doing some of your work at home. If you do pay for childcare, be sure to claim all available tax deductions and credits.

Control Spending, Start Saving

Next, assess areas where you can cut back on other forms of spending. By keeping a diary of all expenditures over the course of a month, you can identify some fat that could be trimmed from your budget. Simply replacing takeout with fresh, but easy to prepare, meals can save a bundle.

With your spending under control, you can start planning for the future. After establishing a fund for emergencies, think about your retirement and education goals. If your workplace offers a 401(k) plan, try to contribute at least enough to take advantage of your employer match. You may also want to consider putting money into an Individual Retirement Account. If paying for your children’s college education – or your own – is a priority, look into several tax-advantaged accounts that can help you save efficiently.

Secure Insurance Protection

While finances may continue to be tight, it is important not to overlook the need for adequate health, life, and disability insurance. How would your children cope if you were no longer able to support them? To start, all families need health insurance. If you do not receive benefits through your employer, look into a high-deductible catastrophic policy that covers the costs of serious illness or hospitalization. Depending on your income, your children may be eligible for public health-insurance programs.

Consider also the protection offered by life and disability income insurance. Life insurance can offer funds that can be used to maintain your family’s standard of living in the event of your death, and disability income insurance can replace a portion of your income if you sustain a sickness or injury that prevents you from working.

Despite your efforts to cut costs and adhere to a budget, you may still find yourself burdened with credit card debt. If possible, move the debt from higher-interest to lower-interest credit cards. Then, develop a strategy to pay down debt gradually and within your budget. In the meantime, avoid the temptation to take on new debt.

Sticking to a budget can sometimes feel like an exercise in deprivation, but it doesn’t have to be if you set aside money for a few treats, like a weekly family pizza night. Even if you can only contribute small amounts, create a “fun fund” to be used for a vacation or a trip to the amusement park. Providing for a family on your own is a challenge, but it is one that can be managed with careful planning.

Other content you may like

  • Mid-Quarter Roundtable Highlights

    Podcast Highlight - FTX Crypto Currency: Can that happen to my money?

    December 10, 2022
    The team shares insights about the blowup of the “get rich quick” crypto blockchain market and its relation to the established financial market. How is the stock or bond market any different? What can be learned from the volatility of a new asset class forming?
    Read this Article
  • Podcast Highlight 1 - Market Recap

    Podcast Highlight 3 - Price to Sales Ratio and AI

    June 3, 2024
    The Strong Valley advisor team talks about how stocks make their way to becoming fully valued and a simplified look at the basic formula used to identify value, which is an important aspect of the current AI frenzy.
    Read this Article
  • Market Volatility Can Trigger Your Loss Aversion

    Market Volatility Can Trigger Your Loss Aversion

    March 2, 2022
    At the foundation of your financial well-being lies your behavior. There is an entire field dedicated to study it – behavioral finance. Did the what-ifs of January’s volatility leave you feeling panicked? Your financial advisor is there to support your financial and emotional well-being, while keeping an eye on your long term investment strategy. Here are some ideas to help cure irrational investing behavior.
    Read this Article
  • Business Owner’s Plan for Succession

    Business Owner's Plan for Succession

    September 15, 2023
    With all of the time and effort you’ve invested into your business, you owe it to yourself to ensure that your business will continue to flourish through developing a business succession plan. When you’re ready to retire or in the unforeseen event such as death or disability, you can help make certain of a smooth transition by considering these key aspects of succession planning.
    Read this Article
  • The link you have selected is located on another server. The linked site contains information that has been created, published, maintained, or otherwise posted by institutions or organizations independent of this organization. We do not endorse, approve, certify, or control any linked websites, their sponsors, or any of their policies, activities, products, or services. We do not assume responsibility for the accuracy, completeness, or timeliness of the information contained therein. Visitors to any linked websites should not use or rely on the information contained therein until they have consulted with an independent financial professional. Please click “Continue to Link” to leave this website and proceed to the selected site.
    phone-handset