Disclaimer: We’re not financial professionals. Talk to a financial advisor for personalized advice on your situation. We are single moms who enjoy studying personal finance and helping other single moms thrive. If our post with financial tips for single moms helps you, check out our other posts listed at the bottom of the page for more great ideas!
Whether you’re new to being a single parent or well versed we’ve put together these financial tips for single moms and dads to help you navigate your financial health. As single parents we often face intense pressure to meet demands as sole caregiver, sole income-earner and everything else that comes with managing a household. We put together our financial tips for single moms with your unique circumstances in mind.
Here are our top 25 financial tips for single moms
Understand your current financial situation
Start with a benchmark. By understanding where you’re at financially you can start to move forward and focus on occurring wealth. To get started, figure out: How much do you have coming in? How much are your monthly expenses? Do you have an emergency fund? If so, how many months would it support you?
Have a budget.
There are many ways to maintain a personal budget. For the past decade, I’ve used the same monthly budget that I keep on a spreadsheet with a separate tab for each month. I have an annual tab with sums for the year. Each year, I make a new workbook. Spreadsheets aren’t for everyone. Find what works for you.
The important thing to remember is to not leave out any categories to try and avoid any big surprise expenses. Typical categories are housing, food, car, debt, clothing, entertainment, insurance, healthcare, childcare, investments, taxes, gifts, donations, children’s extracurricular activities, and miscellaneous expenses.
For a list of 10 great budgeting apps, check out this article by the blog MomBeing.
Stick to your budget
Here’s the secret about budgets. They only work if you stick to them. Figure out what your triggers are for overspending. For example, I shop more when I’m bored and when I’m stressed. Knowing this helps me reign in my spending when I find myself wanting to shop.
To stick to your budget, do some research and find the method that works for you. This could include putting everything on your credit card so that you can quickly check your online account and see where you’re at for the month. Or, if credit cards can be problematic for you, try the envelope method. The envelope method involves divvying up your spending money for the month or week in labeled envelopes. For example, $300 in the groceries envelope, $200 in the gas envelope, etc. . . This way you know when you’re getting low just by a glance and you can cut costs to make it through till the next envelope refill.
NerdWallet has an excellent post on how to choose the best budget to meet your needs and spending habits.
Spend within your means
Don’t try to keep up with the “jones’” or to keep up appearances for the neighbors. It’s so much more important to have a large emergency fund than to have a new car. 70 year old you with thank present day you when at 70 your retirement account is meeting all of your financial needs. You won’t remember that thing you didn’t buy but you will feel the pain of not being financially prepared for retirement.
Cut your expenses
Buy second hand, join buy nothing groups and look for free or low cost activities to do with the kids. Remember, it’s your focused attention they want. Not stuff.
A financial rule I personally live by is to sleep on it before making any big purchases or financial decisions. Taking a night, or several, to think over a major purchase is a good way to root out what’s actually motivating you to make the purchase, whether you really need to spend the money, and what emotions might be driving your decision making.
Schedule weekly or monthly financial check-ins with yourself
I typically take an hour or so once per week to sit down with my budget and add up where I’m at for the month. This helps me stay on track. I also find this to be a good time to write out my grocery list for the week since I know whether I’m on track or need to cut expenses going forward.
Payoff debt
There are a lot of great methods out there for paying off debt. Some will work better for you than others depending no what kind of debt you have and the associated interest rates. This article from CreditCardInsider details 6 methods to pay-off debt that can help you finally kick it to the curb.
Remember that creditors are often willing to negotiate and even provide payment plans. The trick is to be proactive about reaching out and working with them to get the debt paid off.
Eliminate joint debt
Any joint debt should be moved to individual credit cards or loans and the joint credit card or loan should be cancelled. This protects you if the person sharing the joint debt defaults on their share of payments. Re-establish any open joint accounts in your name only.
Invest in yourself
In the short-term, investing in yourself can be challenging when your budget is already stretched thin. Taking on a degree program on top of a full workload can be a daunting prospect.
Finishing your education or certifications can make financial sense if the completed degree will allow you to get a raise in your current role, get promoted, or transition to a higher paying industry.
Calculate the total cost of the degree, any opportunity cost of short-term work opportunities you’d have to decline (such as quitting your side hustle), plus the cost of any additional child care. How long would it take you to make that money back after completing the degree or certification?
Invest in real estate
If the cost of homes is reasonable where you live and you can scrape together a downpayment, buy a primary residence. Or better yet, a duplex or multifamily home. Even if this means having to side hustle for a couple years. According to the NRA, homeowners on average have a net worth that is 41 times higher than that of renters.
When I bought my first home, I was stretched thin and had almost no cash on hand for the first 6 months after closing. Ultimately, it was worth it and the home was in a hot market which caused it to appreciate rapidly. Had I waited until the next summer to buy I would’ve been completely priced out of the market.
If homes are unaffordable where you live, does it make sense to move? Or could you buy a rental property in a more affordable area nearby? If so, can you afford to cover the mortgage in addition to your rent if you have vacant months?
Increase your income
These days there’s almost no excuse not to have a side hustle. The options are endless. SideHustleNation has a great list of 100 Side Hustle ideas you could start today. Many of them are work- from-home or have flexible schedules.
Other ways to increase your income include getting a raise or higher paying job. If that’s not possible in your current role or industry can you change to something more profitable? See our tips above about investing in yourself.
Save up an emergency fund with one year of living expenses
Most financial advice will tell you six months if adequate. As a single parent and sole income provider for your family, having a year’s worth of savings can give you greater peace of mind should something happen.
Take calculated risks
Considering going back to school for a higher degree and have to pay for two years of additional babysitting? Crunch the numbers and figure out if it’s worth it based on the expected salary post graduation.
Learn about personal finance.
The website The Balance has a great list of The 10 Best Personal Finance Books of 2021. Sidenote, I’ve read them all. One of my favorite ways to learn about personal finance is from all of the incredible personal finance bloggers out there. The blog Women Who Money has a massive list of personal finance blogs all written by women taking different approaches to meeting their financial goals.
Be weary of taking on debt. Know the difference between good debt and unnecessary spending. For example, if buying a new car means taking out a loan you should look for a less expensive car.
Know your net worth
Knowing your net worth is an important first step in understanding where you’re at and defining your financial goals. I use the website Personal Capital to track my net worth. I’m able to connect all of my bank accounts, credit cards, loans and any other assets in one place. It automatically tracks everything to show me my net worth in real time.
If signing up for online programs isn’t your thing, you can calculate your net worth by adding up the value of all of your assets (bank balances, retirement accounts, real estate and investments) and deducting your debts (mortgage and other loans and credit card debt).
Know your credit score
There are three credit reporting agencies in the U.S. You are entitled to a free, annual copy of your credit score from each credit agency. You can order your credit reports online through the website annualcreditreport.com or by calling 1-877-322-8228. This is the only website authorized to provide free credit reports by the FTC.
If you have an account with Capital One you can also sign-up to receive free updates to your credit score. Capital One tracks your credit score and alerts you know when it changes.
It’s worth taking some time to learn how credit scores work and what causes them to go up or down. While there are many good arguments for the questionable ethics behind the way credit scores operate in the U.S., this is where we’re at and understanding them will help you make better financial decisions.
Have financial goals and reward yourself when you hit them
Meeting major financial goals takes time, patience and perseverance. Reward yourself in ways that make sense for your budget. A reward can range from a nice bottle of champagne, to a spa day or a vacation somewhere new. Do what works for you.
Celebrating your wins along the way is an important step in acknowledging how hard you’ve worked to meet your goals. And it gets you excited about meeting new goals.
Buy life insurance
This isn’t a fun one and a lot of us, myself included, don’t like to think about when we’re going to die. But look, it’s going to happen, and planning for you kid’s future is one of the most important things you can do.
Write a Will and Name Beneficiaries
You can find free will templates online that you just have to enter your information in and sign. Make sure your will includes a list of all of your active bank accounts, credit cards and loans. Plus login information for your online accounts. Keep a printed copy of your will somewhere secure and make sure someone you trust knows where to find it.
While wills and life insurance aren’t necessarily fun, they are necessary. By planning and preparing for the worst case scenario you lessen the burden on those you leave behind who will be grieving.
Buy adequate insurance
Cover yourself where you need to be covered. Make sure you have and understand your policies for health, car, pet, homeowners (or renters) and life insurance. You can purchase directly from insurance companies or go through a broker.
If you work full-time many companies offer health and life insurance as benefits.
If you bundle your different insurance plans with the same insurance company you can often get a discount. Paying the full year in advance can also come with discounts. Talk to your insurance companies to find out where you can save.
Max out your retirement accounts.
Maxing out retirement accounts not only benefits your future self but also saves you money in the present day by lowering your tax burden. By taking care of your financial future first, you free yourself up to have more flexibility when you’re older. This also benefits your adult children by ensuring you’re not a financial burden to them.
Educate your children and talk to them about financial planning
This tip is so important and one a lot of families overlook. In America, generally speaking, we often carry shame, guilt or other complicated feelings towards money.
I have a friend who grew up in a household where he would see his mom crying while she sat at the kitchen table paying the bills each month. Beyond that, money and personal finance was never discussed in his childhood home. As an adult, him and I had a lot of conversations about personal finance and it was clear he struggled with anything related to money. As he self described, he would bury his head in the sand like an ostrich when dealing with anything financially related. Stories like his are rampant in the U.S. and part of why our society has such an incredibly high level of personal debt.
Here and here are two awesome lists of books for children and young adults to teach them about money and personal finance. There are so many resources out there. You don’t have to go it alone!
Make a home management binder
This article from The Little Frugal House lists everything you could possibly think of putting in your home management binder. What is this magical binder you ask?
The home management binder is everything you need to keep your household organized all in one place. From meals plans, cleaning schedules, active credit cards, insurance companies with policies and contact info to utility companies and bill payment. It is everything you can think of in an organized, color coded slice of heaven. If you get excited when you open your pantry after doing a big pantry clean out and organization, then this project is 100% for you.
Decide who claims kids at tax time. Understand what credits are available.
This can change from year to year but there are some consistent write-offs that have remained stable and lucrative. Make sure you’re taking advantage.
Consider your money mindset.
Do you have a healthy relationship with money?
How do you feel when you think about money? Do you get excited or anxious? Is money something you like to talk about? Or was it always your ex’s jobs to handle the finances?
A negative relationship with money can make it hard to meet your financial goals and save for important milestones. Take some time to think about your current attitude towards money and what influences throughout your life may have brought you to this point.
Remember, nothing grows that isn’t measured.
Further reading . . .
For more guidance on your personal finance journey check out some of our other posts listed below!
How To Be A Successful Single Mom
How Multiple Income Streams Can Make You A Better Single Parent
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