Whether it is by choice or due to circumstances, being a Single Parent and managing the finances all by yourself is no easy task, however, sail-able for sure!
Let me underline a few key areas where you can focus and manage your money with ease.
Here’s an ACRONYM I coined using the letters “S-I-N-G-L-E M-O-T-H-E-R” that highlights keywords which can be remembered easily.
- S for SMART FINANCIAL GOALS – Set SMART Financial Goals- that is Specific, Measurable, Achievable, Relevant, and Time-bound. Short term goal can be- paying annual school/tuition/extracurricular fee of children. Long term goal can be buying a house/car in 3/5 years’ time.
- I for INSURANCE – Taking a Life Insurance Policy for yourself and a good Health Coverage Policy for yourself and children together is very important in the times of shooting Medical Bills. Consult Insurance advisor and check all the features and have both policies.
- N for NETWORKING – Being a Single Mother, it will be a great source of relief to have friends from professional circles who can support you in times of need. There are experts that you may need help from. Stay connected with them. Be a part of good communities and maintain connections with Chartered Accountant, Lawyer & Financial Consultant. Seek their help regularly.
- G for GAINING KNOWLEDGE – Learn about differences between Savings & Investment. This is needed especially by those who have never taken financial decisions in their lives but now must take charge.
- L for taking LOANS cautiously – Refrain from taking any Loans other than for investing in Business or for the purpose of Constructing/Acquiring a House. Good debts are meant for investing and bad debts like borrowing for spending away can cost you a lot in future.
- E for EDUCATING CHILDREN about FINANCIAL CONCEPTS – Teach your children about money. Tell them about how money is earned, the difference between needs and wants, how to do comparative shopping, what is Banking, power of compound interest etc. from the age of 8.
- M for MONTHLY BUDGET – Have a solid monthly Budget and stick to that. List your income and expenses and compare.
- O for OLD AGE PREPARATION – As you too grow older, you must invest for your own happy retired life. There are many retirement return/pension plans which you can choose from.
- T for TAX PLANNING – If you are in Income Tax Bracket, do the necessary Tax Saving Investments in various categories to save Tax. Do IT Return filing on time.
- H for HEIR– Decide who will be your legal heir for all your wealth, Assets. You can write a Will anytime, but the earlier, the better. Ensure there is a Nominee for all your Bank Accounts.
- E for EMERGENCY FUND – Always keep an emergency fund for any unforeseen incident in life, plan annually and keep aside some liquid asset that you can convert to cash easily (e.g., Gold)
- R for CALCULATED RISK and INVESTMENT- Investment is a vast world where varied types of risks exist. There are mutual fund investments which are safe and havE low risk. Take calculative risk and invest.
Author Sandhya Naren, MBA, CAIIB, is Branch Manager of a Public Sector Bank, Writer, Storyteller and Women-Coach on Personal Finance. She is a Co-founder of Manasa Learning Solutions, Life Skills Training Academy for women and children.