Single parents face the same financial challenges that two-parent families do, but they typically have less time and money to work with. Though the thought of making ends meet and achieving financial goals on one income may be daunting, you can take steps to improve your chances of success.
Start by getting your finances on solid footing as soon as you know you'll become a single parent. That includes
- adjusting your spending to match any changes in income;
- building a substantial emergency fund; and
- starting or continuing your financial education so you'll be prepared to make wise financial decisions for your family.
Child care is often a single parent's biggest expense. If you need financial assistance for it, check out ChildCare.gov to find federal and state resources. You may also be eligible to claim the Child and Dependent Care Credit on your federal income tax. Go to IRS.gov to see if you qualify.
When planning for the future, save for your retirement first and your child’s college fund second. You and your child can pay for college through financial aid, student loans, and part-time work instead. Here, too, the government pitches in by allowing credits and deductions for education-related expenses.
All parents should carry disability insurance and life insurance, but this protection is even more crucial when there's only one earner in the home. And you must create a will that names your child's guardian and the person who will manage your child's inheritance to protect your child in the off chance you die before he or she becomes an adult. A power of attorney/advance directive appoints someone to make decisions for you should you become incapacitated. Though it may be unpleasant to think about, you will gain peace of mind from having these documents in place.
The professionals at Extra Credit Union are here to help if you fall on hard times or if you just need assistance putting a savings plan together. Call us today at (586) 276-3000.
« Return to "Extra Credit Union Blog"