Acting as the sole provider for your children, with no spouse to turn to for monetary support, can create a number of financial challenges. As a single parent, you must plan ahead to manage all financial situations. It also is important to live within a reasonable budget and save money to deal with unexpected emergencies.
Single parents run into problems if they don't keep a firm handle on their spending. It's easy to overspend if you don't keep track of where your money goes. Spend a couple of months adding gathering receipts and adding up your expenses so you can get a good idea of where your money goes. Next, subtract your monthly expenses from your monthly income. Because you are the sole breadwinner, you can't depend on any additional income. So if you spend more than you take in, you have a big problem. The trick is to figure out where you can cut costs. Divide your expenses into essentials such as food, housing, electricity and transportation, and non-essentials like eating out. Look at the essential expenses and decide if there's any way you can save money, such as switching to a cheaper phone service provider or using coupons to save on groceries. Meanwhile, look at non-essentials that can be drastically reduced or eliminated altogether.
Lack of an Emergency Fund
To create an emergency fund, you have to consistently contribute money to it. This can be difficult if your finances are limited as a single parent. Set a goal to contribute a set amount of each one of your paychecks -- no matter how small -- to an emergency fund. Ideally, you should save six to nine months worth of living expenses. It's true that building an emergency fund could take years. However, you can bank funds from your tax return, monetary gifts from friends and family and work bonuses to bring up the balance of the fund more quickly. What you save in a few months or a year could save you from a financial downfall in the future.
Not Keeping Up With Credit
You never know when you might need to rely on credit to get you through a tough financial time. If you don't pay your bills on time consistently, or monitor your credit score, you might not have access to credit when you need it the most. Getting new credit is even harder for many single parents because there is no spouse to contribute income or a higher credit score. Use a software program or a calendar to help you remember due dates for bills. Some of your creditors might allow you to schedule automatic payments to draft each month from your bank account on your payment due date. Check your credit report at least once a year to make sure it's accurate. All consumers are entitled to one free credit report, per bureau, per year.
Using too Much Sick Leave
As a single parent, you can easily max out the sick leave in your job between your illnesses and your children's. Once your sick leave is gone, an employer will likely dock your pay when you are absent. Instead of relying on your sick leave to help you care for your children, create a support system of relatives and trusted friends who will supervise your children when you need to be at work. If relatives or friends are unavailable, there might be a sick child daycare program available in your area. Contact your local hospital and ask for information.
Lack of Life Insurance
While unpleasant to think about, tragedies do occur. You can make efforts now to provide funds for your children in the event of your death. Your employer might offer life insurance policies as part of your benefits package. Or you can contact a life insurance agent yourself.
Expense of Childcare
Single parents who work must have someone to care for their children. Daycare costs can dominate your paycheck. If you live in an area with a YMCA, contact the organization to find out about affordable child care. You can also contact your state health and human resources department and ask about childcare assistance programs that are available.
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