Not everyone has a partner to spend their life with. Maybe you are raising a child on your own after the other parent skipped out or maybe you've been divorced twice and aren't willing to give it another try. Whatever the reason may be, if you're single with a child, smart money management is crucial to your current and future financial state. When developing your plan, here are a few steps to take:
1. Don't Overlook the Importance of Estate Planning Documents.
Since you are the sole provider for your child, you need to make proper arrangements for what will happen when you die. The three primary documents that you need are a will, a power of attorney and a health care directive (aka medical power of attorney).
In your will, you will want to name a person to be the guardian of your child. You will also need to name an executor that you completely trust, is well-organized and can handle the tasks of splitting your assets the way you wanted. The power of attorney will provide a designated person the right to make decisions for you, and a health care directive will do the same except it will be only medically related.
2. Develop a Cash Flow Plan.
Whether you received an insurance payment following the death of a spouse or you receive child support payments, it is important to realize that some of these payments may stop or reduce over time. Therefore, you need to plan ahead so that you are able to tackle the world when the amount of income changes. You can adjust your lifestyle or make up the loss of income via other methods. Another option is to . . .
3. Build Yourself a Safety Net.
In the event that money stops coming in or an emergency crops up that requires a significant amount of money, you need to be able to handle these situations in stride. A safety net of cash can help you do this. You should consider have several months of expenses saved in a savings account that can be used to handle day-to-day expenses if you ever find yourself in trouble and in need.
4. Don't Forget Future Health Care Costs.
Medical costs can be particularly crippling. In fact, according to a 2013 study, nearly two million Americans were expected to declare bankruptcy because they were unable to pay their health care bills. Therefore, you should consider planning ahead for any potential health care costs that may arise in the future. This money can be saved in your emergency fund. If you don't have health insurance, it is definitely time to consider getting it – not just for your child, but for you as well. You may be able to get help through the state or the government.
5. Purchase a Life Insurance Policy.
You never know when something is going to happen, but you can make sure that your child is financially secure in the event that you become deceased. Speak to a professional about the type of policy that you will need and the amount that you will need to secure, which will all depend on what you expect the money to do for your beneficiaries.
Single parents provide emotional support and daily care for their little ones. Many times, they are also the sole source of money. If you are the sole financial provider for your child, then the aforementioned tips will help set you up for a better financial state of mind right now, while also securing your financial future. Contact a company like Vahanian & Associates Financial Planning Inc to get a plan drafted and set into place.Share