Money management is not something that can take care of itself or happen by accident; you need to plan your finances and work toward achieving your monetary goals. And as the head of your household, it is your duty to be thorough in all matters related to money!
Single mothers, particularly those who haven’t had to do anything at all with finances before may find this task challenging. That being said, if you do the right things, managing funds can be a breeze.
If you’re ready to learn how, here are 5 tips to help you get started.
Create a Budget
If your partner was the one who always took care of the finances, you’ll have to start anew to manage your money better. However, if you were involved in money matters earlier, budgeting can be a lot simpler- just ensure you have your own budgeting process in place!
Start with determining the amount of money you have in your savings and checking accounts and invested elsewhere. Note the expenses you bear and interest rates you enjoy on each account. Calculate your monthly income too- if you work on an hourly basis or run a business, use the average of the last 6-12 months.
Next, note down the amount of money you owe in the form of mortgage, car loan, credit card debts, etc. Divide other monthly expenses into categories (groceries, utility bills, automotive, and so on) so you can calculate your net worth easily. Look at the bottom line to conclude if you’re living within your means or overspending.
Stash Away an Emergency Fund
As a single mom, you don’t have someone to contribute to the household income, and this can make saving money doubly difficult. Nonetheless, stashing away enough money to take care of 3-6 months’ worth of expenses will act like a safety net in the event you lose your job. In addition to that, putting aside 6-9 months of income will come in handy in emergencies.
To save money, look for ways to earn more or bring down your expenses by avoiding unnecessary expenditures, shopping wisely, using freebies, and looking for low-cost entertainment options. File yourself as head of your household to be eligible for tax breaks!
Plan in Advance for Healthcare Costs
Medical costs can be crippling, especially when they come unannounced. While health insurance is expensive, it is an absolute necessity and costs a lot less than unplanned medical procedures and hospital stays!
Check with your employer if they offer health insurance; if yes, sign up for the same. If you aren’t able to afford the monthly premium, go for a high-deductible plan that covers regular checkups. If that’s not possible either, the least you can do is get your kid covered instead of buying health insurance for the whole family.
Get Life Insurance
Life insurance is just as important as health insurance, bearing in mind that you’re the sole breadwinner in your family. Getting a life insurance policy will not only help you and your child in an emergency, but will also provide for your child’s needs till he’s old enough to work.
Go for a term policy as it’s the most economical. Before you decide on a policy, determine if you want the proceeds to cover living expenses or pay your kid’s college fees or mortgage. Note that while shorter term plans may seem attractive, you may not be able to renew them if your health changes.
Further to this, consider getting disability or long-term care insurance. Check with your employer first; if they don’t offer this benefit, buy a policy. Premiums are usually fixed in the case of disability policies, but if you buy when you’re younger, your monthly premium is likely to be lower.
Your long-term care plan should begin around age 45- think of who will take care of you and how you intend to pay for care received. With a long-term insurance policy, you’ll not only be able to pay aides and helpers, but home remodeling expenses too!
Prepare Your Will
Preparing a will can secure financial means for your kid’s future goals, which is why it is one of the best monetary decisions you can take! You’ll also have to choose an executor for your estate to pay all necessary fees, take care of your child, and see to it that your child receives the money and property you leave him when he reaches the appropriate age.
Not naming a guardian can lead to the judge assigning the other parent or someone else as a caretaker for your child. On the other hand, naming too many executors can be disastrous, so just remember to name a single person you can trust.
Now that you’ve read these 5 tips on managing your funds, you know you needn’t worry about anything at all. So get started on implementing these tips and plan a better life for yourself and your family!
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Author bio: Ann Neal is a writer with a keen in career, fashion, parenting and lifestyle topics. She is passionate about music and loves to play guitar in her free time. She also enjoys spending time with her family and friends.