Financial Planning for Single Parents

Richa is a single mom to a 7 year old boy. It is not easy for her to juggle many things- her job, managing the finances and being the mother and father for her son. She has a government job which offers her job security and covers her basic financial needs. Her goal is to make sure her son gets  a good education.

Preetha's husband died in an accident, leaving her alone with their three kids. He was a factory worker. She got some compensation and money from the insurance company. It is not enough to have some cash in the bank account. The value of cash gets eroded over a period of time. Moreover if it is not invested, it gets spent without us knowing.

Being a single father or single mother is challenging. If you are a single parent with financial troubles, it is even harder. As a single mother, women face numerous other issues – social stigma, unkindly relatives and inflexible archaic legalities. In the midst of all this, you have to ensure the well being of your children. You need to take care of their emotional and financial security. It can be done if you learn to manage your finances properly. Here are some steps that are imperative for a better  financial present and future -

Purchase Life Insurance – Your children are financially dependent on you. You have to purchase a life insurance policy so that their financial future is secure in case of any unforeseen circumstances. If you are not able to buy a big ticket policy, buy one of smaller amount and later on you can increase the cover or buy another one. It is best to buy a term insurance plan.

Set up a Budget and Follow it – You should set up a budget of the reliable sources of income and various expenses. For example, if you are a freelancer, your income might vary. You may or may not get financial support from your spouse. You need to consider things like kids' medical expenses, school activities and birthday presents in the expense sheet. You should also cut down on expenses. For example, check your mobile bill and Internet plans and see if you can go for a less costly plan. You should follow the budget strictly so that you do not run into cash problems.

Plan for Children's Education – Education is the best gift you can give your child. Make sure your financial planning covers the education cost. You can invest in PPF or in a blue chip Mutual Fund scheme on an SIP basis. Such investments can be started off with a low capital amount and you can increase the investment amount whenever possible. This will ensure a good sum to cover higher education costs.

Plan your Retirement  - Do not forget your financial future. It is not selfish to save money for yourself. You have to start saving and investing for your retirement. Retirement expenditure is a tidy sum including living expenses, medical expenditure etc. when you may not have a regular source of income. Do remember that there are loans available for education and housing that your children can avail of but none for retirement. You can start off small by investing in liquid funds or balanced funds which have lower risk compared to equity products but offer liquidity and good returns.

Being financially prudent takes time and effort. But if it is done correctly, as a single parent you can have a strong financial future for yourself and your children.