Raising children isn't cheap. The average child cost $226,920 in 2010, according to an article in Fox Business. That can be tough for the 13 million single parents in the U.S. The following is a list of financial tips for parents raising kids solo.
"Single parents tend to have less money for financial goals," Walter Primoff, director at Altfest Personal Wealth Management, told Fox Business.
Single parents should invest in retirement and education accounts monthly.
“Balance out what’s important to you,” Patricia Seaman, senior director at the National Endowment for Financial Education, told Fox Business.
Single parents often have to choose between things like family vacations and home improvements, but they should prioritize for what's most important, according to the article.
“Financial management for single parents is not much different than that for two parents,” Primoff told Fox Business. “Everything is more pronounced because there’s no second person. Even with child support and alimony, a single parent still needs to watch their budget to cover necessities.”
Using personal financial managers, like mint.com or Quicken, helps single parent's review budgets and find ways to save.
“Knowing that you don’t have a partner or spouse to contribute income, build a good safety net for yourself,” Seaman told Fox. “Save more than if you were in a dual income family.”
Single parents should have an emergency savings to cover living expenses for six to nine months, which can also cover things like care repairs or emergency medical care.
“Make sure there’s a will in place, a guardian is named to take care of your children, and there are financial means for the child’s future goals,” Sue Tirukonda, certified financial planner and certified college planning specialist at Financial Benefits, told Fox Business.
Purchasing a life insurance policy will also help provide for a child if anything were to happen.
Tirukonda told Fox Business that "long-term disability insurance is more important than short-term disability insurance as it will cover unexpected illnesses that last for longer than 90 days.”
The financial planner also said single parents should have enough coverage to handle a life-altering event.
Lower deductibles mean lower expenses that come out-of-pocket while higher insurance limits help protect savings, according to the Fox Businsess article.
“Child-care deductions can help lower what you pay in taxes,” financial planner Edward Wacks told Fox. “If you qualify for head of household status, you can get a more favorable tax rate than if you’re filing single.”
“Be the outstanding employee and lay-off proof yourself,” Seaman told Fox.
Single parents should excel at work by doing things like coming in early, staying late and only turning in the best work.
“Conversations about money management are important, but they become that much more so in a single income household,” Leslie Linfield, executive director and founder of the Institute for Financial Literacy, told Fox Business. “Since a child with a single parent will have friends from two income households that can afford more, having open conversations can help ease a child’s negative emotions from not having as much.”
“If you are receiving child support, keep an eye on your ex-spouse’s financial situation,” says Seaman. “An increase in earnings is an opportunity for you to petition the court for an increase in the financial support you’re receiving.”
Single parents should prepare for when the child support ends, which may mean moving into a smaller home with less rent or mortgage payments.
Joining a network of single parents that help with babysitting co-ops and clothing and toy swaps can allow for a break once in a while.
“Finding out how to balance a checkbook, manage your credit and save for retirement aren’t the only lessons to learn,” Purdue told Fox Business. “For any parent, creating balance in your life and prioritizing your goals may result in a payoff that is greater than money.”