As a single parent, you have a lot of responsibilities. You have to meet your work obligations, go grocery shopping, make dinner, do the laundry, and make sure your kids get to school on time. You’re also a part-time doctor, chauffeur, coach, and tutor — to name the least.
As if that weren’t enough, all the financial burden falls on you. And, that might just be your most important role. After all, if you managing your family’s money correctly you might not be able to do all the fun things they enjoy like going to an amusement park or camping for the weekend.
Money Management Tips for the Single Parent
If things get really out of control, you might be depriving your children of basic needs like food, clothing, and housing. That’s a situation that no parent wants to put their children through.
Yes. That might seem like you have the weight of the world on your shoulders. And, to be honest, you do. But, if you use the following nine money management tips, you’ll be able to provide for your family without losing sleep over your finances.
1. Make a sensible budget.
Why bother creating a budget? Well, it lets you know where your money is going by subtracting your expenses with the money you’re bringing in. When you know this, you can then cut back on frivolous spending and live within your means. As a result, you’ll be able to set and achieve your financial goals.
The thing is, there is no one-size-fits-all budget. So you might want to experiment with different budgeting methods until you find one that works best for you. Some of the most common budgeting styles are:
- The envelope or cash system. Here you would create envelopes for each expense. Next, you fill each with the money needed to cover each so that you aren’t overspending.
- The 50/30/20 budget. This method involves you dividing your take-home pay into three categories; 50% for your needs, 30% for your wants, and 20% for your savings.
- Zero-based budgeting. Popularized by Dave Ramsey, this is when you plan for every dollar in your budget.
- The reverse budgeting approach. If you have a goal, this might be the best budgeting technique where you subtract your expenses from your monthly income.
To make this easier, and free up some of your very limited time, there are also free budgeting tools that will create a budget for you. And, more importantly, keep you on track.
For more budgeting tips, check out the following Due articles:
- How To Budget Successfully
- Budget For Back To School As A Single Parent
- Budgeting For Summer Vacation
- How To Eliminate Expenses In Every Budget Category
- 3 Easy Ways To Track Your Spending And Budget Better
2. Eliminate debt.
If you created a budget, then you should have an idea of how much money you owe. From there, you can come up with a plan to eliminate that debt.
Why? Debt isn’t just stressful. It also can put your family’s needs and financial future in jeopardy.
While it is going to take some number-crunching and self-discipline, you can pay off your debts by:
- Set up a payment plan if you can’t pay a bill in order to avoid late fees.
- Combine or consolidate all of your existing loans into a single payment through a debt consolidation plan.
- Handle joint debt. If you shared a phone plan, you and your ex should get your own plans. If you had a credit card together, your ex should transfer their portion of the balance onto their own card.
- Use a tool like Truebill, Trim, or Billshark to negotiate your bills and cancel subscriptions.
- Reduce your spending by buying used or generic items. Find free and fun things for your family to do — my local zoo has free admission. Use coupons, go out for lunch instead of dinner and be mindful of miscellaneous spending like your daily trip to the coffee shop.
With the savings you have from doing the above, you can chip away at your debt. Start with the debt with the highest interest first and work your way down. And, when you have all of your debts taken care of you can put that money into an emergency fund, college savings account, or your retirement account.
3. Enhance your income and net worth.
You deserve a round of applause for paying off your debt and living below your means. If you really want to build your personal wealth though, you need to increase your income and net worth.
Common advice is that you add multiple sources of income. But, let’s be real, taking on a second job isn’t practical as a single parent. Besides the cost of childcare, when would you have the time to actually enjoy being with them?
One way around this is to pick up a side gig that you can do from home. For instance, you could be a virtual assistant or customer service agent. You can also put your existing skillet to work. If you know how to code you could design apps or websites. And, you could sell your homemade products on sites like Etsy.
Another suggestion would be improving your marketable skills in your existing position. By taking courses or earning certifications, you’re putting yourself in a better position when asking for a raise. Or, even better, landing a promotion.
And, put aside some money into mutual funds so that you’re earning money on the interest. Just keep in mind that when it comes to investing, diversification is key.
4. Ask for assistance.
Even if you’re sticking to a budget and being fiscally responsible, there’s still tremendous financial pressure for parents in the US. “Without resources like paid maternity leave, universal health care, and preschool, raising children can quickly become a financial hardship for a single parent,” notes the GoFundMe Team. Factor in wage stagnation and unforeseen emergencies, a single parent may need an occasional lifeline.
If you find yourself in this situation, you may be able to seek out government support from;
- Women, Infants, and Children (WIC)
- National School Lunch Program
- Summer Food Service Program
- Supplemental Nutrition Assistance Program (SNAP)
- Emergency Food Assistance Program
- Temporary Assistance for Needy Families (TANF)
- Child Care Assistance Program (CCAP)
- Low Income Home Energy Assistance Program (LIHEAP)
- Federal Government Pro Bono Program
- Head Start
- Child Care Tax Credit
- Insure Kids Now
You may also be eligible for scholarships and grants, such as;
- Pell Grants
- Teach Grants
- PeaChic Grants
- Huggies Mominspired Grant Program
- Women’s Independence Scholarship Program (WISC)
- Global Fund for Women
There are also nonprofits that you could reach out to. These include Community Action Organizations, No Kid Hungry, and the American Red Cross.
And, if you need counseling regarding everything from debt to mortgage payments, you can contact GreenPath Debt Solutions.
5. Know the tax benefits.
Did you know that as a single parent you’re entitled to the following tax benefits?
- Filing as “Head of Household, as opposed to “Single,” could land you a higher standard deduction. In 2020, this is $18,650.
- Qualified single parents can get $2,000 per child with the Child Tax Credit.
- Do you pay for childcare? If so, you should be able to secure the Child and Dependent Care Credit. FYI, if your child is under 13, you can get a credit up to 35% of your childcare expenses.
- Single working parents with low to moderate incomes are eligible for the Earned Income Tax Credit.
Just be aware that if you share joint custody, only one parent can claim your child as a dependant. Knowing that will certainly prevent you from getting into trouble with the IRS. And, nobody wants that.
6. Be real about what you can afford.
Obviously, you want the best for your children. But, you also don’t want to put yourself into debt doing so.
There may be times when your kids won’t be happy about this. However, be honest with them and use this as an opportunity to educate them about money and financial planning. For instance, explaining the difference between a want and a need and staying within a monthly budget.
And, from personal experience, I always felt that less is more.
My family only took one vacation per year. At the time, I was jealous of my friends who took multiple trips throughout the year. In retrospect, I cherish these vacations because I remember each one vividly. It also made me appropriate what we did have — even if it wasn’t exactly what the Joneses had.
7. Spend less time on social media.
I totally get it. You want to share pictures and moments of your kids with friends and family. And, the easiest way to do that is through social media.
There’s nothing necessarily wrong with that. But, you should consider reducing your time spent on these platforms as they making us spend more money.
There are several reasons for this, like receiving targeted ads and keeping up with others’ spending habits. 57% of millennials, for example, spent money they hadn’t planned to because of what they saw on social media.
In fact, researchers from Columbia University and the University of Pittsburgh found that extended social media use can reduce self-control — both online and off. Additionally, those who spent more time on “strong” online networks, like Facebook, had higher credit card debt.
“Of course, this doesn’t mean that connecting with people on social media will leave you in debt or that you should delete your accounts,” writes Kendall Little for Bankrate. “Simply be mindful of the time you spend scrolling, liking, and sharing.” And, consider tracking your social usage “to limit yourself–then follow through.”
8. Protect yourself and your children.
“State law (in most places) mandates that you carry car insurance, and your mortgage lender insists you buy homeowners insurance,” writes Emma Johnson for Haven Life. “Don’t neglect disability coverage, and whatever you do, do not skimp on life insurance.”
To be fair, it’s understandable why single parents do not have coverage from life insurance. It’s “one more monthly expense in an often very tight budget,” says Johnson. “Also, it is horrifying to think about your own mortality, and formally make end-of-life decisions about who would care for your children in the event something should happen to you.”
“But the severity of the situation means you absolutely need to carry life insurance,” she states. “Even if you feel confident your children would be well cared for by their dad or your sister or mom, there are so many financial considerations to plan for in your absence,” such as:
- The need for a larger home than those new guardians may currently have
- Extra childcare that the other parent would need to hire
- Expenses like music and sports lessons, summer camps, and of course college educations
- Helping your adult children buy their first homes or pay for a wedding
And, make sure that you keep your insurance policies current. Letting a policy lapse doesn’t just mean you are no longer covered. You may also be subject to fees, legal consequences, and higher premiums.
9. Be ready for the future.
As long as you have your daily finances in order, don’t neglect your long-term financial goals. For parents, that’s your child’s education and your retirement.
What if you can’t contribute to both? You may be better off focusing on your retirement. That may sound selfish. However, your child can always take out a student loan or receive a scholarship. There are no such options when it comes to retirement.
If you haven’t done so yet, start contributing to an employer-sponsored 401K plan — hopefully, it’s one that provides matching contributions. You could also set up an IRA. Even if you start out small, like 50 bucks a month, it’s better than nothing.
Once you get a grip on your retirement, you can open up a savings account for your child’s education. Explore options like an ESA (education savings account) and a 529 college savings fund. By the way, both offer tax breaks.