Thursday, 19 August 2021

Most single moms don't plan to become single moms. 

Which means they often don't have the opportunity to prepare financially for raising children alone. But with some direction, determination and a little creativity, single mothers can do more than survive. They — and their children — can thrive.

Here are some strategies to help single moms get and stay financially healthy:

1. Protect your income and family. 

If you're the primary breadwinner for your family, protecting your income is essential. Disability insurance will replace a portion of your income if you're unable to work. Short-term disability insurance is often the best option because it's more affordable than long-term disability.

Health insurance is also a must-have, as one illness or injury could be financially fatal for your family. If you don't have health insurance through work, try searching the insurance exchanges established by the Affordable Care Act. Also, most states offer health insurance programs for children who are unable to get coverage elsewhere.

Life insurance provides important financial protection for your children, as they would receive the death benefit if you unexpectedly passed. It's wise to buy life insurance sooner than later because you'll likely get a better rate when you're younger and healthier.

2. Know what you owe. 

When you're solely responsible for the financial well-being of your family, you can't afford to take a head-in-the-sand approach to your debt. You need to know how much you owe and what interest rates you're paying so you can make a plan to pay off your debt. Even if it takes a while and makes your monthly budget even tighter, getting out of debt is a game changer when it comes to your financial health.

3. Separate financially from your ex-spouse. 

If you have joint credit accounts, your name will remain on the accounts until they are paid off. If you're relying on your ex to make payments, make sure payments are being made, as late or skipped payments can affect your credit score. Also, keep an eye on your credit report to ensure your ex doesn't try to get additional credit in your name.

4. Invest in your career. 

Since you're the primary breadwinner, it makes sense for you to try to increase your earning power. Whether you need additional training, certifications or degrees, investing the money — in training or hiring a sitter so you can attend classes — can be well worth it.

5. Make sure your documents are up to date. 

Regardless of your age, because you have children, you should have a will. It's not only for advising how to distribute assets, it's equally important to designate who will be your children's guardians if you die. Laws vary by state, but you'll likely need a lawyer to make sure the documents are in order. If you can't afford an attorney, many organizations offer free legal services, including the American Bar Association and SingleMothersGrants.org.

6. Share expenses with other single moms. 

There are nearly 15 million families with single mothers in the U.S., so the chances are good you could find another — or several — single moms with whom to share expenses. Think babysitters, carpooling, tutors, school supplies and more.

7. Stay on top of your financial situation. 

You're busy, which makes it easy to forget to check your account balance or when a payment is due. But overdrawing or missing a payment could result in fees and damage your credit score. Using online banking tools — such as alerts — may help you avoid many missteps. Also, try scheduling a weekly financial review to make sure your bills are paid, check your account balances and see if you're sticking to your budget.

8. If you have savings, consider investing. 

It's not advisable to invest your emergency fund, but if you have additional savings, investing can boost your earnings. Mutual funds aligned with your risk tolerance could be a good place to start.

9. Pay with cash or debit card. 

Avoiding debt is smart whether you're a single mom or not. Credit cards are easy to use, but you can quickly rack up a big balance. What's more, research has shown people spend more when they use a credit card than when they use cash or a debit card. Unless you're confident you can pay off your balance each month, using cash or your debit card could keep you from slipping into — or increasing — debt.

10. Model good financial behavior for your children

You're not only responsible for keeping a roof over their head and food on the table, you're tasked with helping your children become capable, successful adults. Kids learn by watching, so modeling good financial behavior can hopefully help them manage their own finances in the future.

Being a single mom is no walk in the park. But financial stress can make your job even more challenging. Even a few smart financial moves can help reduce stress and allow you to focus on the other thousands of things you have on your single-mom plate.


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