According to some statistics reports, around 25% of all kids live with just one parent. No matter if it’s due to divorce, death or choice, single parents face a lot of challenges, many of which are financial. When you only have one source of income, budgeting can be stressful, saving can be a struggle and paying for child care almost impossible. So what are some of the financial problems single parents come across and how can you avoid them?
When you have a kid, it’s easy to overspend if you don’t pay attention to where your money is going. To get more familiar with your budget, save receipts for a few months and add up your expenses. Next, subtract your expenses from your monthly income and see where you stand. If you spend more than you bring in, you will find yourself in a tricky situation. Think about the unnecessary costs you can cut in order to save money.
No Emergency Fund
If your finances are already limited, it can be very hard for a single parent to contribute money to an emergency fund. However, set a goal to contribute a certain amount of money every month to an emergency fund, no matter how small the amount is. Ideally, you should have about six months worth of expenses saved up, so it will take some time. One great way to build up your emergency fund fast is to set aside all tax returns, money gifts from family or work bonuses. Such a fund might look hard to create but it can save you from bankruptcy in the future.
Unless you’re receiving big alimony payments and a work paycheck every month, you’re probably struggling with insufficient income. One way to handle that and reduce your expenses is to move in with a friend in a similar position or go back to your parents. This will reduce costs and bring two incomes to the household. Another thing is to get a side hustle or start investing in cryptocurrency. Side jobs like easy bitcoin mining won’t take too much of your time, yet you can make a good profit. Look into it a bit closer, study some online tutorials and you will get the hang of it pretty fast.
Too Much Sick Leave
Childcare and your own illnesses can max out your sick leave fast. This means you can receive a pay reduction when you’re absent from work. Instead of taking days off, you can create a support system (family members and close friends) so you can work and make money. You might even find a sick child daycare centre in your area by contacting local hospitals.
Lack Of Child Support
If your child support doesn’t arrive regularly, managing a steady budget can be difficult. In that case, it’s best to rely on your own income for most living expenses and use child support for discretionary items like travel, movies, birthdays, gifts and such.
Your financial challenges might lead to late payments and debt, so you can end up with bad credit scores. This can result in difficulties when it comes to renting or securing a loan—it’s a slippery slope. However, there are things you can do to improve your scores. For instance, study your credit report and see what’s dragging you down. You can also, commit to making minimum payments every month or signing up for credit monitoring services.
Expensive Child Care
A lot of single parents just can’t afford childcare, since the prices go from $200 at a family care centre to $600 for a nanny. In order to provide your child with good child care, you can try paying with pretax money if you employer offers the possibility to contribute to a Dependent Care Flexible Spending Account or any equivalent of this in your own country.
No Retirement Savings
Most single parents prioritize saving for kids’ education and other child-related things instead of saving for their own retirement. That’s a mistake since you can get more financial aid if you put yourself first and think about retirement. There are loans for college, but there are no loans for retirement – take that into consideration.
If you combine good budgeting with acts of mutual help, you will be able to take amazing care of your kids as a single parent. Planning and sticking to that plan will take you a long way, so start today!