Pack lunches, remember soccer cleats and make sure homework is done. Also, check oil in car and fill up with gas, start a load of laundry, empty the dishwasher and calm your daughter’s nerves before her chemistry test. Make it to work on time. Oh, and make sure to have your finances in order.
Being a parent is hard work. Being a single parent can be overwhelming, particularly if you are the only income-earner in the household. Like many overwhelming things, however, it’s best to have a plan. Start your financial plan today.
First, plan for the worst.
Estate planning. It’s not a fun topic to talk about or do, but it simply must be done to make sure your children are taken care of in the event of your death. You will need three important documents: a will, a power of attorney and a living will (or a different power of attorney specifically for healthcare).
Next, purchase the best life insurance you can afford. The amount of your policy will depend on what you’d like it to cover - such as living expenses, a mortgage or college expenses.
Make a cash flow plan.
If the words “steady income” don’t apply to you, then you need to come up with a cash flow plan. When money is tight, understand that you have two choices: either find additional income or adjust your current lifestyle. When you plan ahead for tight situations, the stress of living paycheck-to-paycheck becomes more manageable; you know where to cut corners, where to make up the needed income and how to better save for the next time a shortfall happens.
Set up an emergency fund.
It may be hard to think about stashing away funds when things seem tight, but chances are there are chunks of income that can be better served as part of a safety net. The general rule is to save at least six months’ worth of expenses in a separate savings or low-risk investment account. Some people find an automatic withdrawal or transfer helpful; if they never see the cash, they can’t spend it.
Financial health is tied to physical health.
Do you have adequate health insurance? Medical costs don’t care if your single parent situation was a result of a divorce, death or break-up - so you’ll need to account for the additional expense of insurance or the bills that result (or both). Find a job that includes health and disability insurance for you and your family or comparison-shop for policies at your state’s marketplace (or at Healthcare.gov). Most importantly, take care of yourself; good health is your best insurance.
When deciding whether to fund retirement or college education, choose retirement.
This is true almost all of the time. Students have many options for funding their education after high school—grants, scholarships, loans, jobs—but aging adults do not have such options when funding their retirement. You may find it difficult, selfish even, to consider funding your future before your child’s. It’s best to take care of your own stability before you can start passing out funds to others.
Single parents arguably have one of the hardest jobs in the world and managing finances on top of homework, activities, meal planning, housework and a job can seem impossible. Take one step at a time and enlist help where you can. After all, they say it takes a village; your village may also include a financial planner.
Investing involves risk and you may incur a profit or loss regardless of strategy selected. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision. You should discuss any tax or legal matters with the appropriate professional.
Securities offered through Raymond James Financial Services, Inc. Member FINRA/SIPC, and are not insured by bank insurance, the FDIC or any other government agency, are not deposits or obligations of the bank, are not guaranteed by the bank, and are subject to risks, including the possible loss of principal. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc. Busey Bank, Busey Wealth Management, and Busey Investment Services are not registered broker/dealers and are independent of Raymond James Financial Services.
This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Opinions are not necessarily those of Raymond James. The information has been obtained from sources conserved to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.
Busey Investment Services
201 W. Main St.
Urbana, IL 61801