Making the move from coupledom to the single parent life can be challenging in terms of the emotions involved but it can also take a serious toll on your finances. Whether you’re going from two incomes to one or you’re finding yourself on the hunt for a job after years of staying at home, learning how to manage your money on your own takes some getting used to. Add in the day to day responsibilities of caring for children and running a home and it’s easy to see why single parents are often so stressed. Creating a plan of attack can make it easier to get a grip on your finances when you’re the sole decision-maker.
1. Embrace Budgeting
Learning how to create and stick to a budget is one of the most basic skills you need to master as a single parent. If your spouse or significant other previously took on the burden of paying all the bills and keeping tabs on the finances, it can take some time to take over and work out all the kinks.
Writing a budget is easy enough. You start by sitting down with all of your bills for the month and comparing the total amount to what you have coming in. If you’ve got money left over after all the bills are paid, you’re already two steps ahead. If not, you’ll need to dig a little deeper to look for areas where you can slash spending.
When you’re making your budget, you need to include every expense. That means fixed costs, like your rent or mortgage payment and utilities, as well as those things that fluctuate, such as groceries or clothing. If you know what you’ll be receiving for child support or alimony, you’ll want to factor those amounts in when adding up your monthly income.
2. Create a Safety Net
Having an emergency fund in place is vital for everyone, but it’s especially important for single moms and dads. Without a second source of income to fall back on, not having an emergency stash of cash in the bank could spell financial disaster if you lose your job or an unexpected expense creeps up.
When you’re working on your budget, you need to make sure you’re leaving room to save something each month. Even if it’s just a few dollars each pay period, that little bit can become a lot over time. When the car breaks down or you have to take a day off work to care for a sick child, you’ll appreciate having that cushion in place.
3. Check Your Credit
A separation or divorce can be devastating to your credit if you’re not careful. If you have joint credit accounts, you need to make sure they’re closed to prevent your spouse from racking up debt that you will be responsible for paying back. Reviewing your credit reports regularly can help you keep an eye on any unusual or suspicious activity and prevent any negative impact to your credit score.
4. Evaluate Your Estate Plan
If something were to happen to you, do you know who would be responsible for taking care of your children? What would happen to your assets? Having a will or trust in place allows you to designate guardians for your minor children as well as have a say in what happens to things like bank accounts, insurance policies and real estate after you’re gone.
If you already had these things in place before you became a single parent, you’ll want to review them to ensure that beneficiary information is up-to-date and make any necessary changes. You should also take a look at your retirement accounts. If your spouse is still listed as your beneficiary, you’ll probably want to designate someone else. Otherwise, they’ll be entitled to the proceeds when you pass away.
5. Get the Kids Involved
Even if your children are very young, it’s never too soon to start teaching them basic money management skills. If you’re not comfortable breaking down the specifics of your budget, you can still talk to them about how much things cost and where the money comes from to pay for them. You can also get them involved by setting up a chore system or having them help with grocery shopping. The more kids understand about the situation, the less friction you’re likely to encounter when it comes to the family finances.
Being a parent is an extremely difficult job even when you have help. When you’re going it alone, it may feel at times as if you’re drowning under the pressure. Taking steps to get a firm grip on your finances can make the transition that much easier for you and for your kids.
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