Arguably, being a mother is one of the toughest jobs in the world. It becomes even more challenging if you become a single mother on top of it. Navigating the world becomes rough without the support of a husband. However, that does not mean you’ll fail to provide your child with the finest education and lifestyle. All it needs is the right financial planning. So, we bring you this guide containing essential tips for managing finances as a single mother.
- Start understanding finances
Most women don’t actively make financial decisions as long as they’ve got a husband. If you’re one such, it’s time to take the matter into your own hands. As a single mother, the first thing to do is assess your financial situation. You might have received alimony, insurance amount from the husband’s death, or nothing. Remember not to make any hasty investment decisions with this money. Bide time, receive appropriate financial education, and then decide what you will do with that amount.
- Get an insurance
You must have learned by now that life is very uncertain. So, get insurance to safeguard your child’s future if something happens to you. Choose health and life insurance based on your choice of lifestyle. At times of emergency, this will back you up and cover all medical emergencies. You cannot rely on extended family members to take care of the situation when you aren’t there.
- Revise your goal
You must strike off the goal you set as a couple before becoming a single mother. Prepare a fresh investment approach that will suit your reduced income. Given the different circumstances, you might have to scale back a little. You might have to settle for the child’s local education instead of foreign education.
- Maintain your distance from loans.
While getting loans when you’re low on cash is tempting, it isn’t a viable option. Don’t be pressured to avail of loans to meet your expenses. While taking out a loan as long as you can pay it off on time is okay, don’t overdo it. Debt accumulating over your shoulder will adversely affect your financial future. The debt-to-income ratio shouldn’t cross 40%. It’s a general rule. Only borrow when you’ve got a plan to pay it off.
- Open a SIP
Little drops of water accumulate to form an ocean. The power of compounding can be seen in the nature itself. So, begin with investing small sums of monthly money in a systematic investment plan (SIP). As a single mother, you’ll be able to accumulate a huge amount for your child’s future. The money can be invested in Gold ETFs, Public Provident Funds (PPF), or debt mutual funds as per your choice. In this way, you can afford your child’s higher education in the country or abroad.
- Know your taxes
A little knowledge can go a long way in cutting costs that go into paying taxes. Tax planning will prevent you from affecting the amount you kept aside for investments and savings. Plan, invest wisely and claim the rightful deductions for the kids. According to the Income Tax Act of 1961, certain children-related expenses can be claimed. Do some research to understand your other rights as a single mother.
- Think about your retirement.
Now that you’ve become your family’s sole bread earner stress more on retirement planning. Becoming a single mother will have you high on emotions, and it’s normal to only think about the kids. However, don’t let the overwhelming feeling keep you from making logical decisions. Start setting aside little sums of money for your post-retirement period. After all those years of struggle, you deserve some level of comfort. It’s never too early to start planning your retirement.
Conclusion
Everything will begin with you gaining some financial knowledge and staying disciplined. A single mother can financially stabilize the family and their child’s future. Consulting a financial planner to lay out an appropriate roadmap is strongly recommended. Within no time, you’ll master money management and lead a comfortable lifestyle.
