Best Financial Advice for Single Moms

Gaurav Chakraborty
Gaurav Chakraborty
gauravc@orowealth.com

A single mom is the epitome of strength and motherly love. She fulfills the roles of both parents. Many single moms have to be on their toes to provide for their livelihood and ensure a fulfilling life for their children. While education levels and changes in social mindsets have made these things much easier than previously, there are some aspects you will still need to fend for yourself. One such is financial management. Historically it has been under the domain of the male spouse, but with financial freedom, it is important to arm yourself with the right information and methods to financial acumen.

 

  1. Become A Frugal Spender

 

          If you have just become a single mom, curb your expenses like no other day. Make a list of Necessities, Discretionary, and Luxuries. Take into account the growing needs of children. Then decide on various income streams you can look at. One is your job/freelancing work. Another should be a good investment portfolio which allows you to earn at least 10% of your monthly expenses on an average.

  1. Plan for Inevitable expenses

          Since you are a single parent, your health matters even more. Your dependents will look up to you to be there. Plan for your own term insurance and Medical expenses. Likewise, there will be periodic Household expenses and Child education which should be planned with a fixed amount invested in a good fund which can start giving you good returns over a sustained time horizon.

 

  1. Time Horizon of Various Goals

          Keep your investments planned for longer goals. The time horizon of your investments should be 5-10 years as children’s major education will start after that (K-12, college, post-graduation). Another big goal is the child’s marriage which requires substantial marriage and planning. A combination of balanced funds and liquid funds over a long term horizon with adequate portfolio rebalancing from time to time will help you achieve your goals.

  1. Retirement and House 

          Earmark a certain portion for buying your own home and first multiply the amount for the down payment for five years in a high performing large-cap or multi-cap fund. Planning for your retirement is equally important with a PPF account you can invest in at the beginning of each month that will also help in tax benefit under Section 80 C. Also, later taking a home loan will add to the benefit.

  1.  Investment Type

Since you need to achieve your goals on a single income in most probability, you should opt for a slightly risky investment type of equity-based funds which will help you gain tremendous returns with an option to pull out your funds in volatile markets.

 

You should keep a balance of debt and equity within mutual funds and definitely stay invested in PPF or NPS for retirement planning.

  1. Proper Wealth Transfer

Since you the whole and soul of the financial management of your household, ensure to keep an updated will in place and keep all your assets nominated to your children. This will make succession much easier in case of untimely demise and appoint an executor for this will from your trusted group of people who will have the best interest of your children in mind.

  1. Budgeting is the Backbone

 

This cannot be stressed enough when you are living alone. You need to have numbers to keep an accurate an unbiased track of your expenses and how much you really have to invest. A daily expenditure file adding up to monthly expenses and yearly will tell you quickly where you stand. You can utilise ready-made apps or create a customized one on MS Excel per our needs.

 

Being a single mom can be tough and taxing in every way possible. Ease it up a bit with these strategies in terms of finances. Being a mom is a special blessing and make it worthwhile.

 
Gaurav Chakraborty
Gaurav Chakraborty
gauravc@orowealth.com

Gaurav is an engineer-turned-digital marketeer. Also a personal finance blogger with experience in financial planning and crowdfunding sector. He is a part of the Marketing team at Oro.

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