3 Tips to Managing Your Money--Single Parents

Managing money as a single parent requires wisdom and very few mistakes. The wrong move can bring about financial hardship much faster than if it were just you. Budgeting is not a luxury, but a necessity and sticking to it is a sign of a mature and responsible parent. Here are 3 tips for managing money as a single parent, with a budget:

1. Emergency Fund

You must build up an emergency fund as part of your budgeting strategy. An emergency is inevitable, such as a job loss, loss of property, a broken down car or reduced business income. Not planning for a crisis is wishful thinking. Emergencies happen, and you can prepare yourself by allocating some of your income to building up a three to six month cash reserves. In addition to a monthly amount that you save in your "rainy day" fund, put a significant (or all) of your tax refund in your emergency fund to speed up the process. If you use it from time to time for genuine emergencies, be sure to replenish it so that you have it to fall back on.

2. Food Insurance

Whether it's the aftermath of Hurricane Katrina, or the devastating earthquake in Haiti, government and non-governmental agencies alike have continued to warn individuals to have emergency supplies on hand, including food. There was a time that stockpiling food seemed odd. However, you're just not exercising good judgment if you don't have extra food and water tucked away in case there's a natural or other disaster. The American Red Cross and FEMA recommend at minimum a 3 day supply, but both agencies recommend that you build up to a two week supply.

Managing your money should include a monthly allocation towards building up a three month supply, then a six month supply and ultimately a one year food supply for each member of your household. This often means increasing a reasonable and frugal grocery budget by 50 or 100 percent (depending on your circumstances). If nothing else happens, you'll beat inflation. However, if there is an emergency you'll be prepared to feed your family and help neighbors in need.

3. Car, Renters or Homeowners and Life Insurance

Money may already be tight as a single parent, but a fire, car wreck or death can totally wipe you out. To guard against this, buy and budget for the auto, renters and life insurance. You don't need extensive coverage in each of these areas, but it should be enough to restore you to where you were, prior to an incident. For example, you don't need to budget for whole life insurance, but you do need a 20 year term life insurance policy that will cover your income and give your children the ability to purchase or maintain land and property.

Use these tips for managing money as you work out a budget that you can live with. Find a personal finance software program to make your budget, and keep financial records along the way.

blog comments powered by Disqus