Parenting is not for the faint hearted. The emotional and financial responsibilities of raising children can challenge even the most resilient and resourceful individuals. Many two-parent families struggle to keep up with the financial demands of parenthood and single parents can have an even tougher time. Since single parenting may mean a single source of income, it is even more important to get on track with all of the financial aspects that affect you and your children.
Nolene Parboo, Senior Manager: Deposits for Standard Bank shares some tips to help you keep your finances in check:
Budget!
Everyone who has even the remotest interest in money management will tell you that a budget is the right thing to do. Even if you are not the type of person to document every cup of coffee or chocolate bar you buy, at least have a ball park figure of how much you will spend each month in the various expense categories. If you don’t do this, you will constantly be asking yourself where the money went. If you focus on your spending each month, you will soon realise that the R20 you give to the kids every day for the tuckshop, or your designer energy drink habit is draining your wallet. Drawing up even a loose budget can keep expenses in check.
Plan your exit strategy.
No-one likes to think of dying early, especially if you have young children, but you don’t have a choice; you need to make plans in case you are no longer around. The consequences of not planning your estate can be dire. Think about who will take care of your children in the event of disability or death. Make sure you have adequate life insurance and disability cover. Work with a financial consultant to get your estate planning documents in order, these include a will, guardians and carers and a nominated executor of your estate. Don’t assume that your employee benefits will be sufficient, find out how much they will cover- the chances are you will need to invest in more cover.
Scrutinise the status quo.
If you’re recently divorced or widowed, your entire financial situation may change. See a financial planner to ensure that your accounts and assets are registered under the correct names and that your beneficiaries have been or changed, if needed. Divorce or the death of a partner can dilute your wealth or it can result in a cash settlement or payment. Don’t make any big financial decisions until you have given your emotions time to settle down.
Emergency escape
It is a commonly accepted rule of thumb that you should have three to six months expenses saved in a call, savings or money market account. This is especially important if you are single. If your budget is tight look around your house to see what stuff you can sell that you are no longer using. Or make a pledge to yourself that you will not eat out or buy new clothes until you have built up a safety net. This provides peace of mind and a buffer in the event of a financial emergency.
Retirement savings
Single parents often neglect to save adequately for retirement because there are so many other demands on their cash. While it is tough to save on a limited budget, you should give retirement savings serious consideration. If you received a portion of your spouse’s retirement funds in a divorce settlement, it is vital that you invest this money for the long-term. When you have children, your natural inclination is to provide for, or even indulge them and sacrifice saving. This is the last thing you should do. Take care of their basic needs, absolutely- but do not blow your disposable income on providing them with a lavish lifestyle. You need to prioritise savings to avoid becoming a burden on your children later in life.
Don’t feel guilty
A single parent often does not have the luxury of staying at home with their kids, they may have to work long hours to support the family. The key to keeping the balance is to explain to your children the importance of your job and then ensure that you spend quality time with them on the weekends.
Plan ahead
Do some scenario planning. Try to estimate how much you will need to save for education and transport when your kids are older. The cost of education is quickly catching up with home and car payments. This is not an expense you can ignore. If you are on a limited budget, ask your family to donate cash to your education funds instead of gifts, or speak to your school about your situation; many will assist parents who are short on funds. After covering your basic expenses, create a plan for your long-term goals. You may find that you need to prioritize. For example, it may make more sense to save for your retirement rather than fund your child’s university tuition.
Keep debt at bay
While a credit card can be a life saver when cash is tight, accumulating too much debt can quickly grow into a financial obligation that you may struggle to pay. Make sure that you use credit cards wisely and not to fund a lifestyle you cannot afford. Keep on top of your payments-by keeping your credit record healthy, you will be able to access credit for big purchases like a home or a car. No one said it would be easy to raise children on your own but it can and has been done, with great success. You don’t need to do it alone. Use the resources that are available to you, get professional advice from your bank, use your network and keep focussed on the end result – financial stability and proud, successful children.
