Financial Strategies for Single Parents

Single-parent households are more at risk of financial hardship than households with two or more adult caregivers. The idea of parenting alone can be an overwhelming notion itself, aside from the financial challenges.

 

Some single parents may be making decisions like gas vs. groceries, or dental appointment vs. appliance repairs.  These parents are also likely the ones who are working more than one job to help ease their financial concerns. Traditional two-income families, for example, have an average annual income of $111,278 (more than three times higher than households with a single parent). [1]

 

Financial health is achievable for single parents, though. Here are our tips on how to get there.

 

Tax Breaks
The IRS allows for some child-friendly tax breaks. For example, a single parent with an adjusted gross annual income of less than $75,000 may qualify for a tax credit of up to $1,000 for each child under the age of 17. Additional credits are available for lower-income earners where the adjusted gross annual income is less than around $38,000, or if there are college-age children in the house.

 

Reevaluate Monthly Expenses
There’s no time like the present to sit down and take stock of every monthly expense. Don’t forget essentials like gas, groceries, and health insurance. Sure some of these may be taken out of your paycheck ahead of time, but there may be changes you can make to help put more money back in your pocket. Once you have your full list, rank your expenses from most to least important. Then see how you can cut out some of the least important expenses. Your budget will thank you.

 

Create a Reasonable Budget
Using the list you made in the tip above, assign a percentage of your monthly income to each of your most essential and important expenditures each month. This is one of the most intimidating steps, but also one of the most necessary. If you’re uncomfortable with working a budget manually, don’t be afraid to enlist the help on an app on your smartphone or by using an online budget. In the end, it will be important to understand how much discretionary spending you have each month. This will help ensure you’re not over-drafting your primary account and paying excess in fees.

 

Pay Down Debt Quickly
Easier said than done, paying down your debt is one of the best ways to save money long-term. Stop yourself from putting groceries on your credit card. Instead, only buy this week’s essentials and make sure you have enough left over to pay more than the minimum on that credit card. Use this same mindset with your car loan, student loan, and mortgage.

 

Set Goals
Just because you may not be in the best financial situation now doesn’t mean you should sell yourself short on your goals, whatever they may be. From family trips to paying off your car—having goals will help keep you focused on a bigger, happier picture. The single parent lifestyle isn’t restricted to work and home life. Instead, set your sights high and you may surprise yourself with what you’re able to accomplish.

 

Whatever you decide to do to help get yourself on track to becoming a financially healthy single parent, don’t forget the strength that comes from confidence in your financial future. Make every day count by making one good financial decision that you may not have made previously. And if you get stuck, turn to EmployeeMoney to help face down any financial emergencies that may pop-up along the way.

 

 

 

[1] Forbes: The Cost of Being a Single Mother