Single parents face a number of obstacles, not the least of which is how to effectively manage their finances. Managing finances for a family is not easy when both parents live under the same roof, much less when one parent is going it alone.
Many single parents find themselves putting their long-term financial plans on the back burner. That's often a byproduct of juggling many responsibilities at once, which makes it easy to ignore the one that might not have an immediate effect on the family. But focusing on long-term financial goals might be even more important for single parents than parents who still live together. The latter typically has the luxury of dual incomes, while the former must make his or her single income go a lot further. As daunting a task as long-term financial planning can seem to a single parent, there are steps single parents can take to secure their financial futures.
* Examine spending habits and look for places to save money. In order to plan for your financial future, you need to know how you're spending your money in the present day. Examine your spending habits to see if there are any areas where you might be able to trim some fat and divert those dollars toward securing your financial future. If you're struggling to save even a little money each month, then look for areas where you might be able to save, such as reducing your cable television package or carpooling to work to save money on fuel. Being a single parent can be hectic, so it's easy to lose track of your spending habits. But once you examine those habits, chances are you can find ways to save some money.
* Purchase health insurance. Many single parents have no health insurance, which is a recipe for financial disaster should a medical emergency arise. Kids might qualify for free or low-cost government-sponsored insurance if neither of their parents has employer-sponsored health insurance. But that still leaves your family's present and future finances in jeopardy should you face a medical emergency. Medical costs can quickly add up, draining your finances and leaving you and your children facing an uncertain financial future. Health insurance is a safety precaution single parents sorely need to avoid a potentially perilous financial future.
* Purchase supplemental insurance. Single parents don't have the safety net of a second income to fall back on should something happen and they are unable to work. Many employer-sponsored disability benefits provide just a fraction of your total income, which likely won't be enough to keep you and your family financially afloat for very long. Supplemental insurance can help fill that gap between your total income and the disability benefit provided by your company, likely protecting your savings and ensuring an accident doesn't hinder your long-term financial goals.
* Save for retirement. Saving for college is a goal for many parents, regardless of their marital status. However, single parents with limited incomes should emphasize retirement savings over college savings. That's because financial aid, which many kids rely on to attend college, is based largely on a family's income level. So even kids from low-income households will be able to attend college if their grades are up to par. But single parents must save for retirement to secure their own financial future and ensure they can still afford to support themselves when they are no longer working.
* Establish a will and an estate plan. All parents should have a will and an estate plan that specifically spells out how their money should be distributed to their children and who should act as their child's guardian in the case of the parents' death. This is especially important for single parents who may or may not be able to rely on a child's other parent for support.