Many adults, especially women are increasingly signing up to be single parents. Unfortunately, it is very easy for single parents to get overwhelmed with all of the responsibilities that go along with parenting alone that they neglect one crucial factor – money.
Single parents have a lot on their plate. After all, they are trying to fulfill responsibilities that are traditionally held by two people. They are saddled with the responsibility of providing emotional, social, mental and of course, financial support to their children.
So, here are a few tips to help single parents handle their finances.
- Estate planning is your first priority.
What if there is ever a time when you are no longer able to provide support for your children? You need to take proactive action to make sure this never happens. One phrase – estate planning.
You need three major documents for this: a will, power of attorney in the case of incapacitation, and an extra power of attorney for healthcare. Your will names the guardian for your children in the event you cannot fulfill your parental obligations.
Make sure to choose a person you trust to act as your executor. He/she should also be well versed in financial matters. Your power of attorney is your way of giving decision-making responsibility over to someone else if you happen to become incapacitated.
It is also important to name a healthcare power of attorney. This document would empower someone chosen by you to liaise with doctors about your health care if something would happen to you.
If a lot of this is going over your head, you can always seek out an experienced financial representative such as Bedford IN Financial Advisor to help you with it all. Make sure that you do adequate research before you choose any financial planning company to help you. Remember, it is much better to plan ahead for these types of worst case scenarios than to be unprepared if something should happen.
- Have a cash flow plan.
If you are divorced or widowed, this means that you are probably getting alimony/child support, insurance payments, and possibly social security benefits. It is important for you to take control of your finances and track your spending. This is even more true if you are a single parent living on a single income.
Make a plan for your financial future by projecting your future income over several periods. If for some reason, your projected amount needs to be altered, you can do one of two things: adjust your lifestyle or make up for the income loss from other sources.
Armed with a cash flow plan, you should be in a better situation when a financial hardship arises. You can visit Bedford IN Wealth Advisor to help you map out your financial future. Setting up a trust for your kids is also something you might consider. Appoint a trustee with the same qualifications as when you were choosing an executor.
- Get life insurance
Life insurance is a critical piece of the financial planning puzzle. A life insurance needs analysis will help you determine how much life insurance you need. Life insurance will help replace lost income, cover mortgage debt, and possibly help pay for college expenses if something should happen to you. Life insurance would help ensure that your children are provided for if something unexpected happens to you.
Hopefully, these financial tips are helpful to you if you are a single parent.
Author: Michael Bellush, Bedford Federal Wealth Management
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