Single parents have to face certain challenges regarding their finances which others may not be able to understand. Things can take a ugly turn if the single parent falls ill or loses his or her job. In such a situation if they do not manage their finances well, they may be in a tough situation. Single parents should plan their finances well so that they can reap the benefits later on.
Tips for financial planning
Here are some financial planning tips for single parents which will help them in the long run:
Take care of insurance coverage: Single parents should have adequate insurance coverage. This will help them a lot in the long run. Some of the important form of insurance coverage that single parents should have include health insurance, life insurance, disability insurance and long term care insurance. You should get in touch with your insurance agent and he or she will help you decide how much insurance coverage you will require.
Lifestyle planning: If you want to manage your financial life well, you will have to plan your lifestyle as well. Single parents should know their priorities and then decide how to spend their money. Thus, for single parents, it is important that they have a proper budget. They can monitor their expenses for few months and then draft a budget for themselves. If required, they can take professional help in this regard.
Take care of estate: Well, estate planning is quite important for single parents. It is very important for them to decide who the guardian of their children will be. It is better if someone of the age of the single parent or younger to him/her can become the guardian. You can place the property in a trust or draft a will which will help your children to easily claim it when you are no more.
Save money for your retirement: This is the most important thing and single parents should give stress on it. They will have to make sure that they save ample money in their retirement account so that they will not have to be dependent upon their kids or anyone else during the golden years of their lives. You should not take out any funds from that account and let it go tax deferred.
Emergency account: Single parents should make sure that they have quite a lot of money saved in their emergency account. This will be of great help to them if they fall ill or are unemployed. Single parents should make sure that they have at least 6 – 9 months of monthly expenses saved in their emergency account.
If a single parent follows the above mentioned tips, he or she will be in a better position to manage his or her finances.