Day-to-day life as a single mother – or single father, for that matter – is stressful enough without thoughts of long-term financial needs. However, it is important to save money where you can to allocate some funds for long-term expenses such as your children's education and your retirement. Consider the following as you plan:
- Assistance Programs – Most people think of SNAP (Supplemental Nutrition Assistance Program) or food pantries when they think of assistance programs. If you need those programs, use them – do not let pride get in the way of your children's (and your) needs. However, whether or not you qualify for SNAP, there are a large number of single parent resources available.
Local charities, churches, and civic organizations may have assistance programs, with either basic needs or non-financial assistance such as childcare options. State and federal assistance is often available for rent and housing expenses, loans or grants for further education, securing child support, and other needs.
- Budget – if you do not have a budget, that is the place to start. Keep track of your income and spending, and set out your budget for the year so you do not forget annual expenses like taxes, insurance payments, or long-term debt.
It can help to use the "bucket" approach with income divided into payment/savings buckets – regular expenses like food and rent, long–term/annual expenses, contribution to emergency funds, and discretionary money. Leave a small amount in discretionary funds to have something to look forward to, but be realistic.
Do not forget insurance. As a single parent, insurance is even more important for your children's needs should something happen to you. This includes life and health insurance, if not disability. Remember that subsidies now exist for health insurance for families who qualify.
- Set Financial Goals – It helps to save when you have targets that you are saving toward, such as replacing a car or a college fund. Make separate "buckets," if it helps. Set a baseline for emergency funds, and try to target the discretionary funds for something special, such as saving for a family vacation.
- Debt Management – The temptation to use credit and other debt to ease the situation is massive – and it may be right in some situations, such as maintaining a mortgage – but use debt as sparingly as possible. It is easy to get overwhelmed with multiple debts and minimum payments.
- Savings/Retirement Funds – Take advantage of any tax-advantaged funds you can, especially a matching 401(k) plan. A 529 program for college savings is also useful. Even depositing small amounts on a regular basis in the early years will produce significant results later.
- Take Tax Advantages – Many tax deductions and credits are directed toward lower incomes, single families, and childcare. Filing as "Head of Household" instead of "Single" will generally save money, and the Earned Income Tax Credit, Child Tax Credit and Child and Dependent Care Credit can take thousands of dollars directly off your taxes. In some cases, you may qualify for refunds even though you owe no taxes. That’s right; you may get more tax money back from the government, even if you did not pay any taxes! Don’t be afraid to talk to a tax professional who may offer his or services free of charge to help get you everything you have coming to you.
Bring your child into financial discussions as soon as possible, so they can understand why they may not have the same things as their peers. Use this to your advantage in teaching kids how to save for the things they really want, and distinguish between needs and wants. They will know that they may not have everything they want, but they will have what they need, and they will better appreciate what they do have.
Finally, don't forget to take care of yourself. It is easier said than done, but it is important. Take a deep breath and have faith in yourself. Single parenthood is tough, but you can do it.