In the four years I’ve blogged at WealthySingleMommy.com, I’ve received thousands of questions from women at every stage of their single-parent journey. Queries range from anything like dating and parenting to sex and legal issues. But by far, the number one concern for new and existing single moms is money. How to make more, save more, pay off debt and plan for the future.
I’m thrilled that these questions are being asked.
A solid financial plan and action toward reaching your money goals is so, so critical to your own well-being and that of your family. Don’t let anyone tell you differently. While money can’t buy happiness, a lack of money, or mismanaged financial decisions causes stress, anxiety and limited choices — all realities that affect your ability to be the best woman, professional and mom you can be.
There are six fundamentals to financial success for single moms (or any single parent for that matter):
Earn Like Your Life Depends On It
The vast majority of single moms raise their kids with little or no financial or logistical help from their children’s fathers. Pew found that just 22 percent of dads who live separately from their kids see them more than once per week, and the average sum of child support received, is about $300 per month.
In other words: Single mama, you have a huge amount of responsibility, so when it comes to earning, go big!
Do not make professional decisions “as a single mom.” Single moms are, statistically poor. Don’t be poor. Go for that raise, even if it means you have to work a few more hours each week. Hire extra babysitting so you can get that advanced degree and qualify for more promotions in your future. Take that risk — that horrifying terrifying risk — and start that dream business. Take that risk and invest in yourself. Because, statistically, risk over the long-term is rewarded.
Get Real About What You Can Afford
Because there is just one earner in your family, you need extra financial cushions. This includes living within your means, paying down debt, saving for emergencies now, and long-term crises in the future.
Whether single motherhood found you via divorce, unplanned pregnancy, choice or widowhood, it can be easy to find yourself looking around at those two-parent families at parent-teacher night and feeling pressured to take on a certain lifestyle.
Maybe you can afford a sprawling Tudor in an affluent neighborhood, Caribbean resort vacations, and expensive summer camps. Or, maybe your goals include affording those things in the future.
But if you realistically cannot afford your lifestyle, decide right now to change that. Successful single moms do not replicate their nuclear-family neighbors’ lives. They build their own amazing lives, on their own terms — within their own means.
Pay Off Debt — for Good
Again, if you have to finance it, you likely can’t afford it. This definitely includes expenses like food and utilities, as well as clothes, electronics and travel. A car and student loans fall into the category of, “If the terms are attractive and there is a clear return on the investment, proceed” category, as does a home mortgage (home ownership is not always the best choice for everyone at every phase of life). The less you owe to other people, the easier it is to build wealth and reach your goals.
Protect Yourself and Your Children
Federal law requires you to have health insurance, state law mandates you carry car insurance, and your mortgage lender insists you buy homeowners insurance. Don’t forget disability coverage, and whatever you do, do not skimp on life insurance. Many single moms do not have coverage from life insurance, and I understand the hesitance. After all, it is one more monthly expense in an often very tight budget. Also, it is horrifying to think about your own mortality, and formally make end-of-life decisions about who would care for your children in the event something should happen to you.
But the severity of the situation means you absolutely need to carry life insurance. Even if you feel confident your children would be well cared for by their dad, or your sister or mom, there are so many financial considerations to plan for in your absence. This includes:
- The need for a larger home than those new guardians may currently have
- Extra childcare that their other parent would need to hire
- Expenses like music and sports lessons, summer camps, and of course their college educations
- Helping your adult children buy their first homes or pay for a wedding
Save for the Short- and Long-Term
Keep a minimum of three months living expenses on hand in the event of job loss, medical emergency or sudden major expense like a car repair. At the same time, get serious about your retirement planning. Take advantage of any investment benefits offered by your employer, and seek professional advice about investment strategies that can help you reach your goals. Since you don’t have a spouse, the pressure to save is that much more important, so you don’t have to be a burden on your adult children in the future.
Set Big Goals
If you’re struggling or comparing yourself to your neighbors and friends who seem to be doing better than you financially, it can be easy to fall into the pattern of setting small and short-term goals: pay off a credit card, or have a little extra at the end of the month.
But here’s the thing with goals (and really all of these fundamentals): if you are the least bit diligent, you’re more likely to achieve them. So set big goals. Big, scary, hairy, glorious goals. Dream of your perfect career or your perfect home and then sketch out the steps to achieve them on a goal list.
Whatever your goals may be, I urge you to take it a step further. I’ve seen thousands of single moms blow their own minds and the expectations of others with what they can achieve in this new, free phase of life. This can be you, too. Don’t hold back.
Emma Johnson is a long-time financial journalist, author, and founder of the blog WealthySingleMommy.com, and host of Like a Mother on iTunes. Her work has been featured in the New York Times, Wall Street Journal, MSN Money, NPR, CNN, Headline News, CBS Money, Glamour, and dozens of other outlets. She lives in New York City with her two children.