Financial Tips for Single Mothers

Being a mother is arguably the toughest job in the world. And it becomes even tougher if she doesn’t have the support of her husband. They are up against hostile regulations, unsympathetic relatives and an archaic system that is blind to the new realities of dysfunctional relationships. But their biggest challenge is ensuring their financial security. In a country where financial literacy is poor, women score low on the awareness scale. Being a single mother by choice or circumstances is never easy both emotionally and financially. You are juggling multiple roles at home and finding a balance between being a mother and the bread winner can be daunting. Here we will discuss a few financial tips for you that can help you through this situation..

Understanding of current financial situation: Know how much money you have coming in, Know how much you spend, Spend within your means and Say no if you can’t afford it.This is about knowing how much you have and where it goes. This will enable you to become the driver of your financial destiny instead of allowing circumstances to dictate to you.

Invest in yourself: You are the most important person in this equation. This means you must put yourself first and put some money aside to invest in yourself. Know your skills, Know how much you can earn, Learn new skills, Complete your qualifications / Certifications, and Start saving.Single moms often put all their money into their children’s education. This ends up causing financial stress. You may want to give your children everything you can, but in the long term allocating some resources to yourself will pay off and give you opportunities to earn more.

Start paying off debt:Start small, Pay all your creditors and if you have extra, pay and clear when you can . This will make sure you have a clean credit record. This brings peace of mind and it means you can start to relax knowing that you don’t have people coming after you to pay debts. Your focus should be first on clearing debts that have high interest rates and are draining your monthly income. After that, you should avoid taking any unnecessary loans, unless if it is absolutely necessary. Instead, you can start aiming to purchase something by planning and saving for it in the future.

Life Insurance – Getting life insurance may appear like an additional burden but it is very essential to secure the future of your children. Term plans with regular income or pension after a certain age can be a good option. This will ensure your children are left with some money if any unfortunate incident should occur. You can buy additional rides that cover disability and critical illness. This way you will not be dipping into your savings if the need should arise.

Health Insurance – There are plethora of health insurances available, choose one that suits you and your family. Ensure that your critical illness policy  is covering all stages of illness. Medical emergencies usually arrive unannounced, and make a big hole in your pockets. You can avoid this situation by being prepared for it beforehand. Ensure you have your children as the nominee on the policies.

Budget your expenses – Get a stock of your monthly expenses and income. Go on a financial diet; limit your expenses for essentials and absolutely necessary things and save as much as you can. As Benjamin Franklin said, “A Penny Saved is a Penny Earned”, you will be only increasing your net worth. It may be hard initially but as you see your savings grow, it will be worth the sacrifices. You can also save for something that you want to treat yourself or your children to. But the mantra should be save first, spend later.

Short Term and Long Term Goals & Investments – List down your short term goals like a holiday or buying a fancy product like a phone or even a necessary product like a refrigerator, and long term goals like children’s education, buying a property, retirement or children’s wedding. This will help you to create investment plans accordingly based on the time horizon. There are several investment instruments available which provide tax benefits, health insurance or a fixed return, you can choose from that suits your income and risk tolerance. Mutual Funds with Systematic Investment Plans (SIP) are a good option that allows spreading the investment chunk over months; a few others are PPF, FDs, and RDs OR NPS. You should not forget to create a separate corpus for your golden age as you wouldn’t want to be struggling at that point after taking care of everyone.

Emergency Fund – As an industry rule, it is advised to have savings that can provide easy liquidity which is equivalent to 3 to 6 months of your salary. Invest this in Short Term or Ultra Short Term Mutual Funds.

Lastly, lead by example to your children; inculcate the habit of saving and budgeting from a young age. Making your children financially literate could be the best gift you could ever give. Budget, Save, Invest and Spend should be the way forward depending on your circumstance. As a single mother, running a household on single income and crunched time is a stressful task. With responsibilities increasing by the day, turn the tide of time in your favour. Hire good genuine financial planners to help you achieve financial independence and freedom so that you can spend more time with your children and worry less about wobbling finances.