5 Financial Tips for Single Moms
Rest assured, the process doesn't have to be overwhelming. If you take one step at a time, you can have peace of mind knowing that each action gets you closer to financial security and growing your wealth.
Here are five tips on how to survive financially as a single mom and, in many cases, even thrive.
1. Make an estate plan
Creating an estate plan helps ensure that your kids are set up to inherit your assets rather than your ex or anyone else. This doesn't have to be expensive or even time-consuming. You can create an affordable will online in just a few minutes.
Pick a night after the kids go to bed, pour a favorite drink or a glass of tea, and get it done.
Your will can designate a guardian for your children in the event you pass away or become mentally incapacitated. It can also outline how you want your assets to be distributed, and who would serve as custodian of those funds until your kids reach legal age. If you don't pick a guardian and custodian, the court may choose one for you.
Additionally, for accounts requiring a beneficiary (like 401(k)s and your life insurance policy), you should consider updating the individual designated to inherit the funds.
These are significant updates to make as relationships change in life.
2. Get a life insurance policy
Another important financial tip for single moms is to have an active life insurance policy in place. This can make a world of difference for your kids if you pass away. For a monthly premium, you can leave money behind to help pay off your mortgage, cover your final expenses, and even put your kids through college. It takes just a few minutes to determine how much life insurance you need.
Learn the life insurance basics to understand precisely how it works and what type of policy makes sense for you.
When you're ready to apply for life insurance online, Ethos makes it quick and easy to take care of everything without a required medical exam. You just answer a series of questions about your health and family history.
3. Create an emergency fund
Part of your single mom budget should be saving up for an emergency. If you're just getting your finances in order, start with a $500 emergency savings goal, for example.
This could be enough to cover surprise expenses like a standard car repair or ER visit. Once you've reached that initial amount, shoot for saving for three to six months of living expenses. That way, you're financially prepared for a significant event, like losing your job or taking a medical leave of absence.
If funds are tight, explore how to make money as a single mom to earn some side hustle income. You're already working hard, but working a few extra hours per week from an at-home gig could increase your financial security.
4. Pay down high-interest debt
Having looming excessive debt can prevent you from achieving what you want in life. Perhaps you have many legal bills, medical expenses, or credit card balances. Commit to paying down these balances. Doing so will improve your credit score and free up cash in your budget for other things.
Lower debt also helps you qualify for better home or car financing.
Start by creating a debt payoff plan. Analyze your existing types of debt and find the ones with the highest interest rate. For most people, this will probably be credit cards. Work on your budget and see how much extra cash you can devote to your debt each month. Then, get a sense of how long it would take you to pay off those cards in total.
If you can get it done in a year or two, you may consider applying for a 0% APR balance transfer credit card. There are many rules and stipulations about paying on time to keep that introductory rate, so reading the fine print is essential. But if you're confident you can pay off the balances before that low rate expires, then you could save a lot of money on interest.
5. Save for retirement
Another one of the most important financial tips for single mothers is to save for your retirement.
It's easy to put the focus on your kids and setting them up for success. But remember that you deserve a long, happy life, too. Put away some money each month towards your retirement. That gives you more flexibility in your career choices as you get older. And it also helps you avoid financially relying on your kids when they're adults.
You can contribute to a 401(k) at work, especially if your employer matches your contributions — that's essentially free money. Or, check to see if you qualify to contribute to either a traditional or Roth IRA.
These retirement accounts each offer unique tax advantages.
The bottom line
Learning how to cope financially as a single parent can feel like a struggle at times. But it's helpful to create goals with a step-by-step plan of how to achieve them.
You don't have to be perfect; after all, no one is. Make minor adjustments each week or month to create a more solid financial footing.
Applying for life insurance online is an easy way to help get started with financial planning. You can get coverage within minutes on your phone, laptop, or tablet. And when you apply through Ethos, you don't have to worry about doing a medical exam.
The information and content provided herein is for informational purposes only, and it is not to be considered legal, tax, investment, or financial advice, recommendation, or endorsement. You should consult with an attorney or other professional to determine what may be best for your individual needs.