Money tips for single moms
Are you a single mother? Do you need advice on handling the financial burden? Look no further!
In South Africa close to three quarters of a million people (earning a monthly income of between R6 000 and R30 000) are single parents – 61 percent of these are female. Being a single mother, it can be challenging covering your needs and that of your children with one income. Lizelle Nel, solutions actuary for Sanlam Personal Finance, gives some suggestions on how to stretch your single income to cover all your needs and expenses.
1. Draw up a realistic budget and prioritise
Taking charge of your financial situation as a single mother is extremely important. You can only really do this if you truly understand your current and future financial position. Something as simple as your monthly budget and understanding what you are spending your money on can help with this. Start by critically looking at your monthly expenses and evaluate each expense, deciding if it is an essential expense, a nice to have or a real luxury, and then prioritise your spending. The most important thing about budgeting is to be realistic - you can only stick to a budget if it is realistic. But also remember that your ability to budget will only be as good as your discipline to stick to this budget!
Having a financial safety net for extra expenses that may crop up is a very good idea. To create one you need to get into the habit of saving – even if you can only set aside a R100 a month it is a start, and keep aside some emergency money for those unforeseen expenses such as replacing big appliances or fixing your car.
2. Manage your debt
If you struggle to cover your expenses and that of your child with one salary every month it is easy to fall into the debt trap. To avoid this you need to be very careful about taking on any new debt and about managing the debt you have. Some handy tips include:
o If at all possible, use cash rather than credit
o Keep a very good track of all your debt – reducing the number of store cards and other credit cards you might have is probably a good idea
o Pay off debt as soon as you can
o Know exactly how much interest you pay on the debt you have
o Consolidate your debt into one account (at a lower overall interest rate) if possible
o Talk to a financial expert if you need help managing your debt – sooner rather than later
3. Make sure you have sufficient cover
As a single mother it is important to ensure that your current financial position is in order, but also to take care of you and your child’s future financial wellbeing. Remember to consider the following:
Your child is often solely dependent on you. Make sure that your finances are in order and that you have sufficient life cover to ensure your child will be financially cared for if you should pass away. Assuming that you and your child are dependant on your income, disability cover is highly recommended. Should you become disabled and be unable to work this cover will pay you a monthly income or a lump sum.
4. Tick off this financial checklist
A helpful checklist when thinking about your financial needs, goals and priorities are:
o Updated will: Do you have a will that specifies your wishes with regards to your child and his/her financial needs (i.e. appoint a guardian)
o Life cover: Do you have enough life cover to ensure that your child will be financially secure should you pass away?
o Disability cover: Are you sufficiently covered if you are no longer able to generate an income due to disability or critical illness, such as cancer?
o Emergency fund: Do you have an emergency savings fund to cover those unforeseen events or expenses?
o Education savings: Is your child’s schooling and tertiary education planned for, including related expenses, such as uniforms and books?
o Retirement: And don’t forget to look after yourself too! You also need to ensure that you save enough for your retirement so that you can be financially self-sufficient and maintain your standard of living in your golden years.
Being a single parent can be mentally, emotionally, physically and financially demanding but having a structured organised approach, such as a support structure for household responsibilities and having your current and future financial planning in order is the first step to single parent savvyness. You will probably need to accept that it may not be possible to do it all on your own so, specifically in terms of your finances, make time to meet with a financial adviser to ensure that you have your needs covered and your planning in place. With knowledge and understanding you will be in charge of your current and future financial situation. And don’t forget to consider your own personal needs too and set aside some time for yourself, because you can only provide a happy environment for your child if you are happy yourself.
Sanlam Life Insurance Limited is a licensed Financial Services Provider.
Are you a single mother? How do you deal with the financial strain? Tell us in the box below.