Managing your finances as a single parent can be incredibly challenging. These building blocks are not quick fixes but with slow and steady work, you CAN turn your financial situation around.
Money Coach and single parent Natalye-Marrie shares her essential steps for moving out of financial struggle towards stability for single parents.
“I embarked on my personal finance journey as a single parent almost 10 years ago, and it’s been a challenge and in some ways it still is now.
However, I wish I had known the basics because it would have eliminated a lot of the financial struggles I had found myself in almost 10 years ago.
Today, I’m still on the journey, but I have a great foundation that I’m building my wealth upon and one that I wished I had at the beginning of my journey.
So here are the 5 things that make up my foundation on building wealth which you can use if you’re a single parent in a similar situation.
I know, I know, you’ve heard it all before… but hear me out. It’s one of my clients’ number one problems and I bet it’s yours too.
In my research, I’ve discovered that it’s not that my clients are not capable of budgeting – the problem is actually that they don’t fully understand the concept, or don’t want to face the reality of it!
So let’s break it down.
When you first do your budget, what you may see is your outgoings being more than your income.
In order to reduce your outgoings, you’ll have to go through your expenses and reduce all of the spending that is not a need.
There is no way around this! Your goal is to not be in deficit.
And remember, reducing your outgoings is a short-term sacrifice in order to achieve your financial goals.
2. Avoid consumer debt
Credit cards, store cards, payday loans, purchasing cars on hp, catalogues, personal loans, buy now pay later deals, Klarna, clear pay, PayPal in 3 – all of these count as ‘consumer debt’ – and can seem like an incredibly tempting solution when you’re a single parent struggling to make ends meet.
Your credit card shouldn’t be your go to when you run into emergencies.
‘Buy now pay later’ plans might seem like a good idea at the time but you don’t have to be a genius to figure out that you’re having to use these plans because you’re not great with finances.
So, what makes you think you’ll have the money when the ‘pay later’ becomes ‘pay now with a hefty amount of interest attached to it’?
Exactly, you more than likely won’t. Most of the time people won’t have the lump sum to pay the interest free amount at the end of the deal, so they’ll go into debt.
3. Build an emergency fund
And build it ASAP! This is a separate account to be used for those emergencies and unexpected expenses that will always come up as a single parent and it will help you avoid bad debt.
You should work towards your emergency fund having a minimum of 3-6 months’ worth of expenses saved in that account – which might seem like an impossible task right now – but start slowly and you will get there eventually.
These unexpected or emergency expenses might be things like appliances needing repairs or being replaced, losing your job unexpectedly, paying for an emergency babysitter, unexpected computer repairs etc. – the list unfortunately is endless…
You’ll see that your emergency fund is always fluctuating and so it should be. It’s there to be used as your safety net.
When used, remember to top it back up.
4. Have ‘sinking funds‘
Sinking funds are saving pots that are used to prepare for those big ongoing expenses.
For example, you know that every term, you have to pay for your child’s coding classes. Those classes are around £240 every term.
A term is usually 3 months. You get paid monthly.
You create a savings pot by opening up another account and every month you deposit £80 into that account.
By the time it comes to pay for the next term, you’re ready to pay and not stressing about the magic trick you would have had to perform in order to pay for your child’s coding because you spaced the fee over a period of time that made it financially viable for you.
And this is why sinking funds are great and especially useful for single parents. You can create them for holidays, kids’ extracurricular activities, a new car, that nice handbag you’ve been eyeing up, Christmas and birthday presents, family days out etc.
The whole point of sinking funds is to eliminate the stress that comes along with recurring large expenses. Sounds good right?
This is not talked about at all within the personal finance community, but it should be.
This is so important: How you see yourself is connected to how you manage your finances.
So for example, spending excessively on things you don’t need is usually due to you not wanting to face yourself.
Not wanting to sacrifice on wants for the short term is connected to you not knowing your worth.
Choosing the wrong partner because you’ve remained in the same dysfunctional cycle but are not aware of the self-destructive pattern, costs you money every time. I’ve been there. Twice!
The inner work you do on yourself will save you a fortune. And as a single parent it will help you move forward in all areas of your life.
So, I’m a big advocate of therapy and if you’re unable to pay for therapy then find a self-healing membership group (Dr Nicole LePera has an fab membership but there are plenty of others out there) or buy a book and start from there.
Some books I’ve found useful:
The Total Money Makeover by Dave Ramsey
The Power of Now by Eckhart Tolle
Conversations with God by Neal Donald Walsh
The Artist’s Way by Julia Cameron
The Body Keeps the Score by Bessel van der Kolk
Start your journey to financial freedom by using these 5 building blocks today.
Want more in-depth advice from Natalye-Marrie?
And for more free expert sessions for single parents, head over to the Frolo app.