You will hardly see single parents compromising on the quality of life they provide their children with, even amidst severe financial crises. This is quite a commendable feat given the present socio-economic scenario. Truth be told, rearing a family is one of the most challenging tasks ever, add to that the plight of a single parent in making ends meet and you'll discover a real super-hero of all times.
Facts that add a punch to the statement
- According to the Census data of 2006, there are around 13 million single parents in the country.
- As per the Department of Agriculture, $226,920 was the average cost to raise a child in the country in 2010.
- Children hailing from single-parent families are expected to be four times more likely to live in poverty than those from married-couple families, as of 2012.
So, you see being a single-parent has its share of pros and cons, needless to say that the latter have a more resounding presence than any of its pros. What is the way out then? Read along for that.
Strategies to curtail financial risks and boost income
If you are a single-parent, then you are probably the only head of your household. This is why it is in your best interest and that of your family members to study the needs of your family and try to fulfill them with proper budgeting as well as planning. Here's what will get you running as soon as you hit the ground:
Right from the very beginning it is important to prioritize your expenditures. Ensure that you've balanced out what's important for you and your family. One of your challenges here would be to make solo decisions as to what will the best for your family. For instance, you are divided into going for a vacation or to improve your home with the windfall. The choice is yours, but it has to be made, nevertheless.
As a single parent, you may have limited financial resources at your disposal to meet your goals. So, you'll have to find out the ways by which you'll pay to accomplish them. In the view of the experts, you should contribute towards your retirement accounts every month as well as to that of your children's education accounts.
As a single-parent, there's none to support you or share your financial burden, leave alone contribute to your monthly overall household income. Hence, the onus lies on you to build up a fool-proof safety net for yourself. The strategy here would be to save more or possibly double the amount you could've saved, if you had another earning member in the family.
As for the recommended sum to save, then that should be sufficient to cover at least six to nine months of your living costs. However, don't forget to factor in financial googlies that life may throw at you from time to time. Unforeseen events like an emergency car repair or your child's root canal treatment can be meted out efficiently with the help of an emergency fund that can prevent the rupture of your nest egg.
Yes, this comes a tad late. Do you know why? The reason is when you are well-prepared to handle your circumstances, only then will you be able to follow your financial plan and work in accordance to it. Now as far as financial management is concerned, your situation is no different than a family with two financially-stable parents. But, then in your case, the challenges are more prominent and less forgiving, as there's no second person to step into your shoes and lend in any sort of financial help.
Do not get complacent with budgeting, if you are getting child support or alimony because you'll have to spend as per a budget, nevertheless. Use software found online or even a Spreadsheet or Excel to review your household expenses and to work out a budget.
When you're done with planning for the shorter-term, then it is a must to prepare for the future too. For this you need to legate your estate through a well-crafted will. And ensure that it is an effective one to prevent family conflicts and heartburn in your absence. Nominate a guardian in your will so that your children are cared for when you are not around and that their future goals are realized with the proceedings out of your estate.
However, if you fail to do so, then either your spouse will become the executor of your estate or in his or her absence, the court will assign one of its own people as the executor of your estate. Moreover, having a life insurance policy may provide your children with the necessary financial support as well as any other inheritances held in your trust for the safety of their future.
This is one of the critical lessons your children must be taught when they are actually young. This is because all those budgeting or retirement planning lessons that you'll teach will get etched on their minds for the rest of their life and even help them develop responsible financial habits as they grow up and start to go solo with their own life.
Remember financial literacy is important part of your child's holistic growth as he or she might have friends who come from dual parent households with better spending power than yours. So, to debunk your child's negative thoughts and to boost his or her morale, you must spend some time educating about your financial condition and the way you have managed all these years for their own good.
Apart from that, you need to ensure a financially fortified household by having sufficient coverage that will topple any life-altering challenge and save your financial stability from getting busted. For this, you must a secure handsome-paying job and take good care of your health. As these would ensure that you have more money at the end of each month to contribute towards your retirement accounts. The piece of advice here would be to consult a certified financial planner so that you get expert advice in managing your expenses and increasing your income.
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