Let me start this long-overdue article with my reassurance to all those beautiful parents single-handedly donning the hats of both mommies and daddies. When a divorce is imminent or has already happened, one of the first questions that come into one’s mind is around money. How important is financial security for anyone?
Be it single or mingled, financial security is of utmost importance to everyone in a world that is filled with contingencies. Today we need to put the spikes on our shoes, especially when the breadwinner is a single parent.
Let me put aside those who are earning a hefty package for whom financial and economic challenges do not necessarily apply and who I will address in a different article. In this one, I am talking about those who do not pull home six figures (or more).
For the latter category, here are some of the ways to improve your overall financial picture.
Control the whirlpool of Debts
The reality is that none of us can wave a wand like Harry Potter and control a financial hurricane. Most of us would have an endless list of debts and the best way to tackle this list is to make a list of all your debts and then segregate them into small and large ones.
Catch hold of the debts which you can knock off at once.
Pay those with your extra money, and in case you do not have that extra, start TODAY by collecting those extras. This can be attained by cutting down on your expenses. For example, a small piece of pastry once in a while for your child should not hurt your pocket, but if it becomes a daily habit, that is when it becomes a problem.
Let me give you more examples of how you can become money smart.
The Covid19 situation has given us a wide range of opportunities. Take the advantage of the plethora of facilities that the virtual world has given us. Now that the ‘dirty business of divorce’ or last rituals of your partner are over, sit with a cool head and think how to be an earning member if you are not one already.
You do not have to focus on becoming a millionaire today, and neither do you have to leave your homes and travel the seven seas to earn a living. Start by taking up small jobs, there is an Edutech website where you can deliver home tuitions. Youtube is an option, whether you are already trending or not, where you can upload your videos. Virtual jobs which you can do that were normally done in an office pre-corona.
If your child is a teenager, put them on the right path as well, after all a few extra pennies never hurt anyone. Allow them to master skills that can be easily learned by a child, like boxing, sports, dog-walking.
This will serve well for their pocket money doing some part-time jobs and make them feel proud of being part of the parent’s struggles.
Explain to your kids: “why we cannot have two vacations as of now. The peers must be enjoying four and you would have only one in place or none at all”. (It is tough though!!). But make it a catalyst for you to earn more.
Rein in the spends on the Credit Card
Once you are done with small debts, take the next step.
Give your credit card some rest or an R.I.P. Deal in cash or debit cards. This will keep you safe from being thrown deeper into the clutches of debts again. Go for cost-effective substitutes. The same Allen Solly shirt in a factory outlet or an eCommerce site will help you save some pennies there. As long as we wear Allen Solly who cares about the source (LOL).
Get good health coverage
Buy health cover for yourself and your kid(s) can effectively take care of any unforeseen medical expenses that could otherwise dry out your savings in a blink of an eye. This will add to your tax benefits as well. Make sure you take a plan of those insurances which are notified by Central Government else tax benefits are not availed.
No agent is gonna tell you this. ‘Jago Grahak Jago’ should be implemented in every step you take when it comes to money. This can be termed as your long term debt as it requires you to deposit a premium amount every year for a fixed term. The term also should be chosen wisely. It protects your dependants against any untoward incidents. Zero in on a wise executor whom you can completely depend on to prepare a will and decide on the legal guardians of your children. If nobody is around, you can entrust it in a legal trust. A trustworthy Advocate/CA can help you here.
Finally, one of the most crucial financial advice for single mothers is to not ignore retirement. It is crucial for you to plan your retirement and start saving & investing for it. This can be done via various mutual fund schemes, National Pension Scheme, Atal Pension Yojana, and other retirement plans available on the market. Again, selecting Mutual Funds also should be done wisely.
I will cover in another article all the Mutual Funds which attract the best return, tax savings, etc. (Disclaimer: MFs are subject to market risks).
Open a Savings bank account for your kid
This can be adopted by both with larger income and smaller income. Every bank has different schemes that will protect the future expenses of your child like education, medical expenses, etc. Moreover, it is easy to open a savings bank account. This will serve as a large piggy bank for your child. Needless to say, those with daughters should NEVER ignore the benefits of Sukanya Samriddhi Yojana.
Invest in SIPs
A trustworthy banker can explain to you the best SIPs which will suit your pockets. These SIPs can give you a good corpus once it matures. The boon is you can deposit as much small amount or as much large amount as possible.
Rental Expenses and meals
Since most of us are working, it is understandably taxing on us to cook after the endless hours we spend in front of our computer or the endless client meetings we got to attend, and takeout food is that small little hungry caterpillar that eats into your finances without your knowledge. The best thing to do is get a fridge on EMI if you cannot afford it (the small one will do for you and your kids). After that, make a weekly meal plan, and spend a day prepping these meals and freeze all meals for the whole week. This will make you less hysterical or lazy on the days when you just do not have the energy to cook and will also resist the urge to spend on takeout!
We do not need Antilia to live in. Do we? (Although it would be nice)
A rented studio apartment can be enough or a one-bedroom apartment. Make sure it is somewhere closer to the schools your kids attend and your workplace. It will minimise transportation costs. Additionally, any apartment within a 3-5 kilometer radius can help you reduce the uber costs.
Ignore the metaphorical mean neighbours
It is indeed difficult and disappointing when we get zero help from the society that we live in but remember that we are attending a bigger fight here. Your life is yours to live and only you know what it takes to survive financially, so do whatever that is.
Being a single parent is not easy. But it is not impossible either, but remember that we are together.