For starters, I applaud your taking the proverbial "bull by the horns" here.
In reality, it is even more important for single parents to have their "ducks in a row" financially and legally than their two-parent counterparts.
Okay, I will stop with the idioms.
For now.
Recently, the Parent Herald provided five pertinent pointers for single parents in its article titled "5 Financial Planning Tips For Single Parents For Your Family's Protection."
Here is a quick take on these tips:
Create a safety net.
Have you set aside enough cash so a flat tire, broken washing machine or unexpected (and uncovered) medical emergency does not send you into panic mode?
This cash cushion is commonly called an "emergency fund."
So, how much should you set aside?
You should have enough cash (or easily tapped account) to cover household expenses for six months.
Make insurance a priority.
No one wants to be "insurance poor," but two forms of insurance are simply must-haves for single parents.
What are they?
Medical insurance and life insurance.
Unforeseen medical emergencies can be a big drain on your family cash flow.
Look for health insurance plans that include regular check-ups for parents and their dependents.
Prevention is always better than treatment ... and cheaper, too.
How would your child or children make it financially if you were deceased?
That is where life insurance comes in.
It is a financial miracle that provides an "instant estate" to care for your loved ones.
Work with an insurance professional to determine the right type and amount of insurance for your unique circumstances.
For example, what will be needed to cover the day-to-day needs of your children, let alone their education needs?
While you are at it, strongly consider "disability income" insurance to help replace your income if an illness or injury removes you from the workforce (and your income from the household).
Adhere to a cash flow plan.
Do you have a budget?
If no, then you will want to create a budget to determine your household cash inflow and outflow.
This free online guide can get you started.
Once your budget is in place, you can treat yourself and children once in a while, but avoid giving in to impulse purchases.
Your family budget also will educate your children about money and may help them understand why you may not be able to afford some things.
This is a perfect opportunity to teach them the difference between "needs" and "wants," as well.
When it comes to parenting, more is caught than taught.
Do your estate planning.
If your children were orphaned, who would rear them to adulthood?
Should they have a "surviving parent," do you really want him or her managing the inheritance you leave behind?
These issues and others illustrated why you need to do comprehensive estate planning.
At a minimum, single parents need to prepare a will to designate the backup parents (assuming there is no fit surviving parent) and inheritance manager.
Plan for retirement.
No, really.
Do not neglect your own future retirement stability by trying to meet your all of your child's immediate needs and wants.
Think of it this way - if you are financially secure and independent in retirement, then you will not be living in their basement.
Although I have heard parents joke that they "want to live long enough to be a burden on their children," no one really wants to end up there.
In the end, solid financial and estate planning will provide your children with the protection they need and you with priceless peace of mind.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
Reference: Parent Herald (April 6, 2016) "5 Financial Planning Tips for Single Parents for Your Family's Protection"
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