Being a single parent is far from a rarity in the United States. In fact, one-parent households number in the millions. Even if another parent provides monetary assistance, single parents often independently make decisions that impact their child’s financial security. Here are a few guidelines that may help single parents with their family’s future.
Discuss finances with your children. Kids today are very aware of their environment. Discussing your finances with them will help them manage their expectations of what the family can afford.
Live within your budget. An obvious step to saving money is to develop a streamlined budget that still meets your family’s needs. This may be as simple as limiting discretionary spending, which, for some, can add up to savings of hundreds of dollars a month.
Initiate Protective Measures
Protect your income with long-term disability insurance. A significant number of mortgage foreclosures are the result of loss of income. Should you become unable to work, long-term disability insurance may be obliged to cover a portion of your salary for an extended period of time. The easiest and most cost effective way to get long-term disability insurance is through your employer. Check the specifics of your company’s benefits. You may be covered and not know it, or it may be an option you can elect.
Update your will. A will helps ensure that your wishes for your children will be followed, instead of being mandated by the state. Moreover, assets such as real estate, investments, automobiles, and jewelry can add up to a sizeable amount. A will can provide guidelines for how you wish your assets to be managed or used to benefit your children.
Increase Your Net Worth
Learn about savings and investment opportunities. With the cash you save from your new budget, consider the many savings and investment opportunities available to you. For instance, instead of keeping too much cash in low- or no-interest-paying accounts, you may want to consider the growth opportunities available through a wide variety of mutual funds or tax-deferred investments. These accounts can be incorporated into a college and/or retirement savings plan.
Get Professional Advice
Your financial advisor can suggest specific strategies tailored for your situation and point out any additional considerations, such as a systemic or dollar-cost averaging plan. This investment strategy helps you make consistent contributions on a regular basis.
Being a single parent can be difficult and demanding. However, successfully managing your finances doesn’t have to be. Your financial advisor can help you develop a personal financial plan to help you get started. IBI