Single Parents & Financial Strain
Parents in every family situation face financial strain, but single parents have the additional stress of providing for their families on one income. Even when child support is provided, taking care of the day-to-day expenses as well as the long-term financial planning can be overwhelming to a single parent, especially when you consider the cost. In 2010, the Department of Agriculture estimated that it costs approximately $226,920 to raise a child. Setting goals, sticking to a budget and teaching your children the value of money can help reduce financial strain.
Setting a Budget
Knowing where you are financially can be a challenge, especially if you are new to managing the family's finances. Take a look at your income, including any money you make from your job, child support or alimony you receive and any other sources of income. Compare that to your expenses, such as:
- other regular bills
This will give you an idea of how much you can spend and save every month. Stick to your budget to avoid additional financial strain.
Setting Financial Goals
As a single parent, you will need to save for your own retirement. You will also need to put aside money for your children's educational expenses. Saving can be difficult if you find you have to spend every dime just to make ends meet. Look for ways to save that are automatic, such as taking advantage of any retirement plans at work or investing in a 529 or other college savings plan for your kids. Start a separate savings account that everyone can contribute to for family financial goals, such as a summer vacation or a new television.
Single parents need to consider life insurance, wills, estates and trusts to ensure their children are financially protected if the parent should die. Make sure you have a guardian named, otherwise the court will appoint one. Taking care of these legalities will not help your present financial strain, but it will give you the peace of mind that your children will be covered if the unexpected happens.
Most single parents qualify for "Head of Household" filing status, which will save you more money on your taxes every year than if you file as "Single." You can also take advantage of other tax deductions, including child care tax credits if you have your children in daycare or after-school child care programs while you work.
Teach your kids about money early. FoxBusiness.com says this is especially important in a single parent household since kids in that household might have friends in two parent households who can afford to do and have more. This can be confusing and troubling to young children. Talk to your children openly and honestly about your financial situation. Explain what the family's priorities are, such as food and housing, and teach kids how to save early.
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