Unexpected events are a part of life and every now and then something happens that completely alters our world. Death and divorce can happen to anyone and when they do, parents can suddenly find themselves caring for children on their own.
Naturally, this is quite an adjustment in a number of ways and adding financial woes to those that come anyway with the territory will only make the transition harder. The good news is that by establishing some simple financial rules and sticking to them, one can easily make some significant savings and relieve much of the usual stress that comes with managing finances.
Below are some top tips for single parents looking to effectively and efficiently manage their finances.
Budget
The most important step towards effectively managing your own finances is to set out a proper budget. To do this, you will first need to identify what your current income and outgoings are. You will then need to identify any areas where you can save money. This includes any and all unnecessary purchases. You should begin by working out what you need to spend on the essentials; paying the bills and repaying any loans as necessary. Once you know what your income is and you have established how much money you need to spend, you will then know exactly what your disposable income is.
If you have monthly bills to pay then set up an automatic payment system such as direct debit to ensure that all payments are made on time. There are now a plethora of apps and websites around that will make managing your budget easy. In particular, apps available for smartphones are useful as they will allow for you to track your spending as you go. Having a visual reminder of your remaining balance every time you spend your money is an effective psychological aid for those looking to reduce their spending as much as possible.
If, after budgeting, you think you need a cash injection to see you through the near future then you should use a loan calculator. A loan calculator is a very useful financial tool that takes your monthly income and outgoings and helps you to work out whether you can afford to take on a loan. If you feel this would be helpful and are unsure whether a loan is right for you then be sure to try a loan calculator.
Set Up a Savings Fund
You can never predict when you will experience financial hardship and it can come at the most unexpected and problematic of times. The best defence against this is to preempt it by setting aside money whenever you can find it and placing it in a special fund. This fund can then serve as a source of emergency money should you find yourself in unexpected circumstances.
As a general rule, you should aim to have at least a month or two’s worth of rent and food money set aside for emergencies, but this will not always be possible. It is a good idea to set up a bank account for this specific purpose and to make sure that your savings are kept entirely separate to your other money, as this will greatly reduce the temptation to spend it.
State Support
There are a number of different support and benefits programs that are aimed at single parents. These can range from discounts on the cost of childcare to money to supplement a part-time income. It is free to check if you can claim any form of benefits, so it is always worth doing so, especially if you are struggling financially.
Create an Estate Plan
As a single parent, you don’t want to dwell on what would happen if the worst were to occur and you were to die, but this is a scenario that should always be considered before it is too late. By setting up an estate plan you can have some control over how any money is apportioned and used after your death, as well as establishing who you would like to look after your children in your absence. For some people, this will involve setting up a trust; others will simply stipulate how they want any assets divided. In either case, it is worth consulting with a solicitor regarding what should be included in such a plan.
Consult with A Professional
If you can afford the services of a qualified accountant or similar practitioner then you should definitely consider it. A qualified professional will not only be able to advise you on good money management practices; they will also be able to suggest various ways that you can make savings, which might not be immediately obvious to the average person.
Managing our finances as a single parent can seem like a daunting task, but with enough care and attention, it is easy to set up your finances to manage themselves.
