2877: 6 Financial Planning Tips for Single Parents by Riya with The Budget Mom on Money Habits

[00:00:00] [SPEAKER_00]: This is Optimal Finance Daily. 6 Financial Planning Tips for Single Parents by Riya

[00:00:07] [SPEAKER_00]: with The Budget Mom.com and I'm your host and personal finance enthusiast, Diana Merriam.

[00:00:14] [SPEAKER_00]: Now let's get right to today's post and start optimizing your life.

[00:00:22] [SPEAKER_00]: 6 Financial Planning Tips for Single Parents by Riya with The Budget Mom.com

[00:00:30] [SPEAKER_00]: Budgeting and financial planning are a challenge for many people, regardless of their marital or

[00:00:35] [SPEAKER_00]: income statuses. As a single mother, however, you simply have no room to make mistakes.

[00:00:42] [SPEAKER_00]: You have small lives who are dependent on you for their well-being and their future.

[00:00:48] [SPEAKER_00]: You must find an effective way to budget on a monthly basis as well as to prepare for the

[00:00:54] [SPEAKER_00]: future. When you learn how to budget as a single mom and how to prepare for the future,

[00:00:59] [SPEAKER_00]: you'll be more successful and enjoy a less stressful future with your kids.

[00:01:04] [SPEAKER_00]: 1. Purchase Life Insurance Savvy financial advice for single women

[00:01:11] [SPEAKER_00]: also focuses on purchasing life insurance. There are various types of coverage that you can buy,

[00:01:17] [SPEAKER_00]: such as term and whole life. The death benefits can be used to pay for your funeral

[00:01:23] [SPEAKER_00]: as well as to support your children financially if you die. They can also be used to fund their

[00:01:29] [SPEAKER_00]: college education. You can use a life insurance calculator to estimate the ideal proceeds that

[00:01:36] [SPEAKER_00]: you need based on your current financial situation. Buying term life insurance is one

[00:01:41] [SPEAKER_00]: of the best steps you can take to care for your kids after you pass. So you should include life

[00:01:48] [SPEAKER_00]: insurance premiums as a necessary expense in your budget. 2. Develop a long-term budget.

[00:01:56] [SPEAKER_00]: Understanding how to budget as a single mom can be complex, but it's critical that you

[00:02:02] [SPEAKER_00]: succeed in this effort. A solid and thoughtful budget includes all reoccurring and non-reoccurring

[00:02:09] [SPEAKER_00]: expenses for a month. As a single mom, your income may vary from month to month,

[00:02:15] [SPEAKER_00]: and some sources of income may not be reliable. For example, your ex may unfortunately not pay

[00:02:23] [SPEAKER_00]: child support on a regular basis, and this can make it difficult to budget properly.

[00:02:29] [SPEAKER_00]: Your budget should take into account reliable sources of income. Your budget should also be

[00:02:35] [SPEAKER_00]: projected out over several months or even over a full year. This will help you to determine when

[00:02:41] [SPEAKER_00]: cash flow issues may arise, and it gives you weeks or even months to plan a strategy. Consider

[00:02:49] [SPEAKER_00]: holiday and birthday presents if the kids need braces and other non-reoccurring costs as you

[00:02:55] [SPEAKER_00]: prepare your budget. 3. Establish a rainy day fund.

[00:03:01] [SPEAKER_00]: Regular savings is critical for single women, and you should adjust your spending habits so that

[00:03:07] [SPEAKER_00]: you can afford to save regularly. As a first step, establish a rainy day fund. You may be well aware

[00:03:15] [SPEAKER_00]: that costly expenses can arise unexpectedly in life. While you can't know when they'll occur

[00:03:21] [SPEAKER_00]: and how much they will cost, you know that future events will inevitably occur and can cost a small

[00:03:28] [SPEAKER_00]: fortune. You simply must have a plan in mind for paying for these expenses if you want your budget

[00:03:35] [SPEAKER_00]: to stay on track. A rainy day fund provides you with the financial plan you need. You may begin by

[00:03:42] [SPEAKER_00]: saving as little as $25 per pay period, but save more if you can. Over time, this account balance

[00:03:50] [SPEAKER_00]: will grow to a healthy amount. Ideally, you want this account to have at least six months of your

[00:03:56] [SPEAKER_00]: income in it. 4. Plan for medical expenses.

[00:04:01] [SPEAKER_00]: With kids, medical expenses are unfortunately common. Everything from well checks and sick

[00:04:08] [SPEAKER_00]: visits to emergency room visits and more can add up. You must have health insurance in place,

[00:04:15] [SPEAKER_00]: and you can purchase your own policy if you can't obtain coverage through your employer.

[00:04:20] [SPEAKER_00]: The premium should be a regular part of your budget. Also, allocate a portion of your budget

[00:04:26] [SPEAKER_00]: toward your co-pays, prescriptions, and more. If you happen to go a month without a doctor's visit,

[00:04:32] [SPEAKER_00]: you can easily enjoy having extra money in your budget. However, if you do have these expenses,

[00:04:39] [SPEAKER_00]: you'll be happy to know that you've budgeted for them. By planning for these everyday expenses,

[00:04:45] [SPEAKER_00]: you can avoid having to consider them as stressful unexpected expenses.

[00:04:51] [SPEAKER_00]: 5. Prepare for the end of life. It can be difficult to consider estate planning for children when you

[00:04:59] [SPEAKER_00]: can barely make ends meet, but it's nonetheless important to start at the worst-case scenario

[00:05:05] [SPEAKER_00]: when preparing your financial house. The bottom line is that everyone will pass away at some point,

[00:05:12] [SPEAKER_00]: and you simply cannot determine ahead of time when this will happen. You must be prepared for

[00:05:18] [SPEAKER_00]: the care and financial well-being of your children when the time comes. Will and estate planning

[00:05:24] [SPEAKER_00]: should include details about who will look after your kids, how your assets will be allocated,

[00:05:31] [SPEAKER_00]: and when your financial assets will be passed on to your children. Also, it must include a power

[00:05:37] [SPEAKER_00]: of attorney regarding your healthcare decisions in the event you're unable to make the decisions

[00:05:42] [SPEAKER_00]: yourself. 6. Prepare for retirement. Many single women stress about their inability to save as much

[00:05:51] [SPEAKER_00]: money as they would like to. After your rainy day fund has been established, you may wonder if you

[00:05:58] [SPEAKER_00]: should save for retirement or the kids' college education. Both require a healthy amount of money

[00:06:04] [SPEAKER_00]: to pay for. As a mother, it can be difficult to make a selfish decision to save money for yourself

[00:06:10] [SPEAKER_00]: when you know your kids will need money for college. However, prioritizing retirement over

[00:06:17] [SPEAKER_00]: college is critical if you don't have money available to allocate to both. Consider that

[00:06:24] [SPEAKER_00]: your kids can use grants, scholarships, student loans, and even money from a part-time job to pay

[00:06:30] [SPEAKER_00]: for college. You, on the other hand, will have no ability to borrow money for retirement. You must

[00:06:38] [SPEAKER_00]: fund your own retirement plan because there are no other options available. There will come a time

[00:06:44] [SPEAKER_00]: when you no longer want to work or when you're no longer able to work and you must financially

[00:06:51] [SPEAKER_00]: support yourself. As you can see, there are many aspects of financial planning that single mothers

[00:06:57] [SPEAKER_00]: need to consider. While you want to improve your budget so that you can more easily make ends meet

[00:07:03] [SPEAKER_00]: now, you also need to plan for the future in various ways. You may need to trim down your

[00:07:09] [SPEAKER_00]: current spending so that you can pay for life insurance, retirement savings, and more. However,

[00:07:16] [SPEAKER_00]: by taking these steps today, you can rest easy knowing that you and your kids will be provided

[00:07:22] [SPEAKER_00]: for now and in the future. You just listened to the post titled, Six Financial Planning Tips

[00:07:33] [SPEAKER_00]: for Single Parents by Raya with thebudgetmom.com and I'll be right back with my commentary.

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[00:08:42] [SPEAKER_00]: According to a 2018 prudential survey, 54% of women are the primary breadwinners of their

[00:08:49] [SPEAKER_00]: families, and women control more than 50% of the country's personal wealth. That says to me

[00:08:56] [SPEAKER_00]: that women are excellent at managing money to build wealth. And this is probably because women

[00:09:03] [SPEAKER_00]: typically earn higher investment returns than men. Does it surprise you that women own more diverse

[00:09:10] [SPEAKER_00]: portfolios, trade less often, incur fewer fees, and are less likely to panic sell in a downturn?

[00:09:18] [SPEAKER_00]: The data is clear that women are actually pretty damn good with money. I think the big problem

[00:09:25] [SPEAKER_00]: is that we lack confidence. We believe the bullshit that we're not good at math,

[00:09:31] [SPEAKER_00]: and we have trouble pushing ourselves to ask for a raise or apply for the job we want even if we

[00:09:37] [SPEAKER_00]: aren't 100% qualified. While women may have unique financial challenges driven by things we can't

[00:09:44] [SPEAKER_00]: control, I think there's a lot we can control, including advocating for ourselves. So to the

[00:09:51] [SPEAKER_00]: women listening to this, I'd encourage you to keep prioritizing your finances and recognize that you

[00:09:58] [SPEAKER_00]: have more power than you might realize right now. And that should do it for another edition of

[00:10:03] [SPEAKER_00]: Optimal Finance Daily. I'll be back tomorrow as usual. So I'll see you there on the Wednesday show

[00:10:09] [SPEAKER_00]: where your optimal life awaits.