McEvoy Ins Blog
Handling finances as a single parent can be a challenge. It’s easy to feel overwhelmed when you’re on your own. Here are seven financial tips to help you get a handle on your money and help you build financial security.
Create a new budgetA budget is an essential tool to help you stay on top of paying your expenses and debt and saving for your goals. Knowing where your money is going and when it’s being spent starts with math. Figure out your monthly income and your expenses on paper, a spreadsheet, or in a financial app. You can determine this by taking a look at your pay stubs and bank statements to see what has been deposited into your accounts. If you have any additional income from a part-time job, child support, or some other source, make sure to include that money as well. When you know your income, write down a list of your expenses based on your monthly bills.
To create your budget, subtract your total expenses from your total income each month. If you have some money left over you could put that in savings or use it for something else. If the balance is in the red, you’ll need to cut back on your spending or generate additional income.
Limit your credit card debtAs a single parent, it’s a good idea to break the habit of relying on credit cards. Interest rates and fees can add significant debt to your finances, especially if you get behind on payments. If you need money, consider taking a loan from a relative. Your employer may also offer employee loans that get paid back through paycheck withdrawals at no interest. Check with your human resources department to find out if that’s an option for you. If you must use a credit card, make sure you get a card with the best possible interest rate. Visit Bankrate.com to compare card rates, fees, and terms.
Set up a safety netIt’s smart to create a financial safety net that includes three to six months of expenses to help see you through a crisis. Unexpected events can have a huge impact on your financial future if you aren’t prepared.
Create an estate planTo make sure your wishes are carried out after you’re gone, you need to create an estate plan. First, you’ll need a will that specifies who will take care of your children if you die and how your assets will be passed down. If you already have a will make sure it’s updated. If you don’t have a will, you should create one with help from an attorney who can ensure you have the right guardians for your children designated, beneficiaries chosen and you’ve picked an executor you trust, who will oversee the implementation of the will.
Along with a will, you should also draft a power of attorney document, which gives someone the legal right to make decisions on your behalf if you are unable to do so. For more on estate planning check out our blog on estate planning checklists.
Consider life insuranceBuying life insurance is a smart way to help protect your family, especially if you’re a single parent. If it’s your first time shopping for life insurance, you should figure out how much life insurance you need for your family. Be sure to factor in the cost of caring for dependents, such as your children, as well as their cost of living after you’ve gone. Total your monthly bills and fixed expenses, and make a list of what you provide for your family. This should include necessities like food and medical costs, but also money for vacations and other quality of life needs. There are several kinds of life insurance to consider, from term, to guaranteed, to indexed universal life. To find out more about your life insurance options, check out our blog, Finding the right life insurance match for you.
Think about getting disability insuranceAs a single parent, you don’t have a partner’s second income to shoulder expenses if you’re suddenly unable to work. Check with your employer to see if they offer disability insurance. If they do, you could receive a reduced income when you put in a claim. If your company doesn’t offer disability benefits, a life insurance agent can help you set up the insurance.
Know what tax benefits you qualify forSingle parents are eligible for specific tax benefits, exemptions, and credits, so be sure to do your research on what you might qualify for. Visit the IRS website to learn more about different tax credits you may apply for based on your situation.
If it seems like your grocery bill is higher than last year, it probably is. Inflation is up 7% over the past year – which is the fastest increase since 1982.1 If you’re trying to eat healthier without breaking your budget, consider the following tips:
Set a budgetYour budget is a tool to help you stay on top of how much you’re paying for your food and other items in your life. To find out how much you should be budgeting for groceries, it helps to review your previous month’s purchases. If this amount still seems right for you, use it as a framework for future grocery budgets. If the amount seems too high, recalibrate based on your income and other necessary expenditures.
Create a meal plana meal plan can help you save by keeping your shopping list focused on the foods you plan to make. If you need some inspiration, the U.S. Department of Agriculture offers monthly food plans that can be used as guidance for grocery spending.
Make a shopping listIt may seem like a no-brainer, but using a shopping list when at the grocery store can help in some big ways. Having a list can mitigate the potential of you forgetting an item and needing to go back to the store. It also helps stay true to what you need instead of purchasing items that aren’t part of your meal plan. Apps like AnyList can be a great way to keep your shopping list at your fingertips. You can even meal prep within the app.
Order aheadMany grocery stores offer the option to order your groceries online and pick them up - all without even entering the store. This can be a great way to ensure you don't go rogue on your shopping list and you keep your budget (and diet) in check.
Waste not, want notIt’s happened to all of us. Despite our best intentions, we end up with fruits and veggies at the back of the fridge rapidly approaching their expiration date. Instead of letting that food go to waste, consider a frittata or a hearty salad to use up extra veggies. Fruits that are nearing their expiration are the best for baking and making jams. Consider cooking down berries for a flavorful oatmeal topping, or freezing your extra fruit for smoothies.