Navigating Financial Planning For Single Mothers

Financial planning is essential in today’s times, especially in this economy. Not knowing where your next dollar will come from can be a crazy experience, but imagine having that experience with little ones who depend on your every decision.

Here are some gathered insights from experts that will aid in helping single mothers navigate financial planning, and hopefully reduce stress from such a huge responsibility.

If you are a single mother, know a single mother, or need financial advice, this is the article for you.

“Run your fixed costs like rent, daycare, and food through a test budget based on one income and one emergency,” said Eric Croak, Certified Financial Planner. “If that number does not work, adjust the plan, not just the spreadsheet. Add $250 monthly to a baby fund six months ahead of birth. You will need it for things people forget like unpaid leave, infant meds, or backup childcare. That number should live in a separate account you do not touch until the due date.”

Babies are expensive so saving and preparing as much as possible for the arrival can be beneficial. Saving ahead of time will essentially help you avoid feeling as if you’re drowning alone.

There are many resources available for single moms. Though some people don’t want federal or state handouts, they can be helpful support.

“Single moms often qualify for tax credits, childcare subsidies, or free financial resources,” said Michelle Taylor, founder of the Women and Wealth Initiative. “Maximize your benefits, like the Child Tax Credit, Earned Income Tax Credit, or Dependent Care FSA. These can add thousands to your annual financial plan.”

Although it can be difficult to think about death, single mothers need to think about their children’s future, possibly without them. Life insurance and a living trust helps.

“Single mothers need life insurance to make sure that their kids are provided for should they pass away, because often-times their children rely solely on them,” said Jake T. Howell, Esq., estate planning attorney and owner of San Diego-based law practice.

Additionally, Jake says the kids should also have a living trust set up to receive the life insurance proceeds. The trust ensures that their children do not inherit all of the life insurance money at once, at age 18. A well thought out trust, funded with life insurance money, can ensure that their kids are provided for and supported until they are old enough and mature enough to provide for themselves.

“If you are saving $100 a month for a 529 (a savings plan for future education) while still covering rent, you are doing something,” said Eric. “Don’t wreck your retirement trying to fully fund their education. If you stretch too thin to cover tuition now, you are risking your own financial survival later. Kids can borrow for college. You cannot borrow for old age!”

In a perfect world it would be great to have the money to pay for your child’s entire college tuition, but most families can’t. However, something is better than nothing. It is also important to think of your retirement years, and your needed funds.

The old idiom “put some away for a rainy day” comes into effect here. Saving a stash for unexpected expenses will come in handy, because who likes to borrow money?

“Life as a single mom means you are the backup plan,” said Michelle. “Aim to save 3 to 6 months of expenses in a high-yield savings account. This isn’t just about emergencies, it’s financial protection for your family’s stability. Even if you start with $10 a week, consistency is key.”