As a single parent, you are doubly responsible for providing your child with the best education, opportunities, and experiences available today. It is also doubly daunting for you as a single parent to manage both your personal and professional lives as you have to pay the utility bills, take care of your work obligations, do the grocery shopping, prepare the dinner, take your kids to school on time, and do the laundry, among the myriad of other work.
On top of all this, you have to be a mentor your kid can look up to while ensuring that all their needs are taken care of.
All these things make being a single parent financially nerve-wracking. As you don’t have any support, you may have had to struggle many times with all the financial responsibilities of child care. Being the sole breadwinner and the only caretaker of your child is never easy. This is what makes it imperative for you to make sound financial decisions. Here are a few tips to make financial planning easier for you as a single parent to secure your child’s financial future.
1. Create A Will
A simple will for single person is the best way to ensure that your child is taken care of after you pass on. You aim to secure your child’s financial future and wealth creation, but you don’t have anything in writing; this defeats the entire purpose.
As a single parent, you must make a will for your child to ensure that your assets and wealth are transferred to your children or any other family member whom you trust. The will will ensure that everything is transferred in the manner you want to safeguard your child’s inheritance.
You must describe your vision and your child’s life in a letter of intent. Future guardians and trustees can use this to safeguard your child’s financial future and their rights in your absence.
2. Prepare A Budget
Making a budgeting strategy is one of the most important things you need to do as a single parent. Your finances might suffer if you don’t know where and how your money is being spent. Having a budget will allow you to save money by cutting unnecessary expenses and enabling you to track your cash flow. During the initial years of your child’s life, you may be relying on a single income source, forcing you to stick to tight budgets.
You will have to repay EMIs and loans, and you cannot postpone or skip them. Sticking to a budget will allow you to adjust to any changes in your finances. Set aside money for school fees, bill payments, and essential shopping. Start saving money; it will benefit you significantly on a rainy day.
3. Get An Insurance Cover To Protect Your Kid
As we all know, life can be uncertain. Hence it is always a good idea to safeguard yourself and your kids from any potential risk. This is why it is advisable to get health and life insurance that suits your needs. You need to get insurance that covers the cost of medical treatments and other healthcare and indemnifies any risk to your and your kid’s life. You need to plan for many financial considerations in your absence, no matter how confident you feel that your trusted ones will take care of your kid in your absence.
Your kid can live a good life if you have adequate insurance coverage. You must ensure your child has good health coverage that will provide all the financial requirements they will require and get a child insurance plan that will offer full coverage for all issues.
4. Prepare An Emergency Fund
There is nothing like an emergency to deplete your savings. For such circumstances, it is advisable to set up an emergency fund. You can do this easily by looking over the budget for the month and allocating a percentage of the income to the emergency fund; you also will need to make cuts in spending if required.
You need to ensure not to touch this fund after you have it set up. You need to see how it develops by letting it grow naturally. Ideally, your emergency fund should be able to cover the expenses for up to a year and a half, which includes any EMIs you have. This fund will provide the funds when a child or parent urgently needs money due to an emergency.
A single parent will find this fund useful when money is required in an emergency and to satisfy their children’s needs. Making smart judgments, such as creating the emergency fund, is required throughout the entire journey of single parenthood to ensure that you are always financially prepared and secure for every unforeseen situation.
5. Open A Savings Account In Your Child’s Name
One of the essential skills a single parent must teach their children is the fundamentals of managing money. You have to teach them the importance of saving money while they are still young so that they can appreciate the value of hard-earned money before they start spending money on their own. One way of protecting your child’s financial future is by opening a savings account in their name.
After you set up the account, you can start depositing regular amounts of money. This is money that they will inherit someday; hence, it is important to teach them the value of spending wisely. They should also be encouraged to save money so they understand the value of hard-earned and saved money. This way, they will be wise spenders when the money from the savings account gets transferred to them.
Parting Thoughts
As a single parent, you should be able to effectively handle your resources to provide a stable future for your children. However, it is common for many single parents to delay financial planning as they deal with long-term challenges and a lack of support. This makes them unable to support the needs of their children financially later on in life. You would be better equipped to handle these challenges if you address the issues at the right time and have a financial roadmap.
Hopefully, this article has helped you identify how to better prepare for such a situation to better support your child’s financial future as a single parent. Best of luck with your endeavors.
