Raising a child on your own can be challenging, but it doesn't have to compromise your ability to remain financially sound. Managing your finances as a single parent can seem like a daunting task but by making a few simple changes in the way that you approach money-related issues, you can ensure that you are able to improve your current and future financial situations.
Here are three tips to keep in mind as you strive to create a realistic money management plan as a single parent.
1. Create a safety net for emergency use.
There are many unexpected expenses that can arise when you are raising children. If you have a variable income or you just want to ensure that you are prepared to cover any unexpected costs you may face in the future, it can be beneficial to work towards creating a safety net.
Experts suggest having enough money in your emergency fund to cover at least three to six months worth of expenses. This will help you access money you might need to pay for school trips, or to cover your living costs should you lose your job.
2. Establish a college fund for your child.
If you want your child to attend college in the future, it's important that you start planning to pay for tuition now. It can be challenging for single parents to qualify for loans and other financial products that could be used to help cover the cost of tuition, so starting to prepare for your child's continued education as early as possible is a critical component in any sound money management plan.
You can establish a 529 saving account with the help of a financial advisor, which is designed specifically for college savings. These plans provide tax breaks like earnings that aren't subject to federal taxation, making them a sound investment.
3. Plan ahead for health expenses.
Keeping your child healthy can be a costly endeavor. In order to ensure that unexpected health costs don't compromise your financial wellness, you should plan ahead for major health expenses. If your employer offers a health savings plan, you should take advantage of this plan.
By directing money into the health savings plan, you can access funds that are not subject to taxation in order to pay for your health-related expenses. These plans can cover the cost of major medical expenses as well as minor ones like prescription medications, co-pays, and dental care.
Taking the time to be financially prepared is critical for single parents. Ensure that you have a viable money management plan in place by creating a safety net, saving for your child's college education, and planning ahead for medical expenses.Share