Column: Managing Money As A Single Parent

October 20, 2020 | 0 Comments

Carla Seely Bermuda October 2018[Written by Carla Seely]

Organising and planning for your family’s financial well-being can be challenging at the best of times. However, there are many more challenges involved when managing and maintaining a household as a single parent. Being a single parent means you have less money to spare, and there is a pressing need to have a solid long-term financial plan because in most cases there are no alternative sources of income.

The stress of knowing that there is no other adult to share the financial responsibilities can be overwhelming, however, this stress can be reduced by implementing a few key elements of financial planning.

I often tell my clients, it is important to know where your money goes as it is really the foundation to getting on track and staying on track, so where do you start?

Create a budget

If you don’t have a budget that you follow and review on a monthly basis, create one by writing one down or using an Excel spreadsheet, and track everything for a period of three to six months. Everything means everything, including little things like the lunch you pick up at work each day or the coffee you grab at Brew in the morning.

It is important to capture what you spend and then compare your income to your expenses, as you will clearly be able to determine where your money is going. You will be surprised how easy it is to identify ways to reduce expenses in order to put a little extra aside for a rainy day. There are only two ways to have enough money to save: either earn more or spend less.

Manage your debt and implement a pay-down schedule

Limit your liabilities to the bare minimum. Use credit cards only for emergency situations. If you have credit card debt, pay it off as soon as possible, and if you have substantial debt, create a plan to pay it off over a set period of time, and stick to it. If you have one or more credit cards with a high balance, work with your bank to see if you can consolidate your debt and reduce your interest rate. Remember: credit and credit cards are not designed to maintain your day-to-day lifestyle.

Buy life insurance

Having life insurance will give you peace of mind knowing that your children will be taken care of financially should something happen to you. The amount of life insurance you need depends upon the number and age of your children, your debt level and what you want the life insurance coverage to achieve. Life insurance through your employer ends when you terminate your job, so it is important to have life insurance coverage beyond what you have with your employment.

Start a university fund

The earlier you begin to save for your children’s university expenses, the more time that money has to grow, even if you can only afford to put away $100 each month, after 15 years of that discipline you will be in a far better position. Also talk to your child’s other parent to see how much each of you can deposit and how often.

Plan for your estate

Regardless of your age, it is essential that you have an estate plan to provide for your children in case something happens to you. Your will names who will inherit your house, bank accounts, investments, personal property, and, most importantly, it identifies who will serve as guardians for your children. Without a will, the courts will decide what to do with your assets and your children.

Retirement

Do not forget about your retirement. In Bermuda we are fortunate to have a mandatory pension programme. That means, whether we like it or not, we will be saving for our retirement. However, relying solely on your mandatory pension contributions for retirement is typically not enough, so even if it is only an extra 1 or 2 per cent from your monthly salary directed towards your pension, in the long term it will make all the difference.

Maintaining your finances and planning to be financially independent is going to take some time and discipline, but if you are willing to spend time focusing on your finances and are open to a little creativity, you will significantly reduce your stress level. Focus on what is most important: your family and making sure you provide a solid foundation for them.

- Carla Seely is the Vice President of Pension, Life and Investments at FM Group. If you would like any further details, please contact her at cseely@fmgroup.bm or call +1 441 297 8686.

testimonial-divider

20 Most Recent Opinion Columns

Opinion columns reflect the views of the writer, and not those of Bernews Ltd. To submit an Opin-ion Column/Letter to the Editor, please email info@bernews.com. Bernews welcomes submissions, and while there are no length restrictions, all columns must be signed by the writer’s real name.

-

Read More About

Category: All, News

Leave a Reply