Being a single mom is a hard nut to crack. The emotional responsibility coupled with the financial burden makes it a pretty daunting task. Being the head of the household means you are responsible for leading it from the front (in more ways than we can possibly imagine). Meeting all the challenges head on and taking care of the kiddos – you are braver than you think you are if you are pulling it off.
The emotional bit aside, taking care of all finances alone in times like today is especially difficult. With the cost of living aka inflation and changing economy, the situation is becoming more dire and the expenditure is only going up (it has become like a one-way street). On that note, we thought we could give make a short guide of personal finance tips for you so that you could handle your money better. We hope you know that finance management is vital for your good life and that of the kids. Here goes:
1. Budget it out!
The only person more powerful than the person who has got it all planned out, is the person who is sticking to the plan made above. If you are a single mom with a budget, trust us you are way more powerful than you think. Plan a monthly budget out. Decide how much you are willing to spend and how much goes into the savings. Expenses have no end to them but one must learn to pick their battles.
A budget will help in streamlining your spendings. There will be daily expenditures and there will be the weekly outings with the kids, so that means you need to be a woman with a plan. Take out money for the kids aside and for yourself and limit your expenditure to the things you actually need. Try to stick to the budget as much as possible and you will see how your financial state improves and becomes more stable.
2. Multiple sources of income for the win
There is no end to expenses, especially when you are the only earning member in the family. The solution is that you must try to diversify your income sources. If you are working full-time somewhere, try to find a freelance job that you can do from home or one that you can work over the weekend. The idea behind expanding your income sources is to ensure that there is always enough money to pay for your expenses. Having kids means that you are not only responsible for your own life, but also for the lives associated with yours.
The more the number of people in the family, the more is the expenditure. Obviously, the more the expenditure, the more is the money needed. The moral of the story is that don’t put all your eggs in one basket. What if your salary is a few days late? Or what if you lose your job due to some unforeseeable circumstances? We don’t say you will, but do you really want to wait and see? No, right? So the bottom line is that please find an alternate source of income in addition to your main gig. A secondary source that offers a steady income inflow will make you feel much more secure about your tomorrow.
3. Emergency money can be your saviour
We are sure that you have heard of an emergency fund. Having one is the only way to make sure all your unexpected expenses are met. There will be no end to financial commitments ever. Save some money every month and build yourself an emergency fund to cushion on. The way life is, expenses are unpredictable. There could be regular, planned expenses or there could be totally unplanned financial emergencies.
The right way to go about it is to make sure that you have at least 1 year of expenses, saved aside in the emergency fund. You have to remember that you can’t really afford to ‘not’ have an emergency fund with your kids depending on you. All this money that you put aside will save you on a rainy day and will make your personal finance front better.
4. Be discreet while taking credit
Credit cards are tempting little things; after all it’s only because of them that you can buy things that you want, without worrying about the money you have in your pocket at any given moment. We completely agree that it’s not wrong to splurge once in awhile (Instant finance options for the win, right?) but as a single mum, you should be responsible about where you spend your money. Your funds are limited and so should be your expenses. The idea is that you are allowed to use credit cards but the ‘when’ and ‘where’ should be sensible.
Though, you should keep in mind that if you take credit using a credit card and by chance, default or miss any of your payments, your banking history will get affected. A drop in credit score also means that you will have trouble taking any kind of loan for a possibly more urgent/important need in future. We are not trying to scare you or saying that you must absolutely not take debt rather, we are asking you to weigh all the pros and cons before making a decision to take debt or a loan of any kind. Be honest with yourself and make the right call, as and when needed.
5. Start investing today
Investing your money is a great way to make it grow. Most of us don’t realise, but it is only small amounts that accumulate over the years to form a huge sum. Investing is a good practice as it helps you in beating inflation; after all, your money will multiply . This money can help you reach not only short term goals like trips and but also long term goals like retirement.
Investing your money is the only way to create wealth; there are no shortcuts for this one. The one thing required to start investing is strong financial discipline. If you decide to keep aside some money every month and spend it in mutual funds, real estate or some other investment instrument, you will be able to fulfill all your dreams and that of your kids as well. Don’t wait for the perfect time to start investing; in our experience, it’s never too late to start with finance management, though the earlier the better!
6. Teach your kids about financial responsibilities and commitments
We have not met any parents who want their kids to make wise choices in life. As a single parent, it becomes more so your responsibility to make your children aware and smart about financial duties and commitments. The idea is to teach them about saving from early days. Teach them the value of money and how to save and spend in the perfect amount, after all finance management starts with baby steps .
Also, you can be honest with them about the existing financial circumstances. For example, you can tell them that you can eat out once every week and not more. It’s not about living like a miser rather it’s about making the right choices, at the right time. Make them realise that you don’t have to spend an extravagant amount in order to get things that make you happy. Prioritize spending and teach them the same. Get what is absolutely needed and chop off the rest!
7. Insurance is a must
This one is a no brainer. Remember that it’s not just your life you are in charge of, but also the life of your kids. Emergencies don’t knock and come, so you must always be prepared. Might be a health emergency pops up and you don’t not have enough money in your emergency fund. For times like these, you should make sure that you get a term insurance policy for yourself. Along with that you should also get a health insurance, both for yourself and your kids.
In addition to providing coverage, a term insurance also helps in saving tax. Most insurance policies are affordable and don’t demand huge premium payments. A lot of unplanned/unexpected can be dealt in a much better way with the help of an insurance plan. Trust us, buy insurance today, you will thank yourself later 🙂
We hope that these little things can make your financial journey as a single mum better. The idea is that you should start, start personal finance management even if you start small. Even if you end up using only four (yes, that’s the bare minimum) of the tips above, trust us, your financial life will be a cakewalk.