Are you a single parent? If so, then you probably understand just how difficult it can be to manage your finances effectively so that you’re not only “getting by,” but setting and achieving financial goals that are beneficial to you and your children. Fortunately, with just a bit of careful planning, tracking, and allocating of money, you can be well on your way to a more stable and secure financial future.
Get Those Goals on Paper
Before you can start working towards getting ahead financially as a single parent, it’s necessary to sit down and figure out exactly what “financial success” would mean to you. This means sitting down and setting some goals for yourself. Specifically, you’ll want to have short-, medium-, and long-term goals written down and set in stone. For instance, your medium-term goal might be to save up enough money to put your children through college, whereas your short-term goal may be to simply put food on the table for your family. Whatever your goals are, make sure they’re something you will feasibly be able to attain based on your income.
Set and Follow a Budget
Next, it’s time to analyze your current spending versus income to determine where you can cut back and start saving some money to put towards your financial goals. Consider printing out your last few months of credit card/bank statements and bringing them to your financial advisor. From there, you can get a better idea of where you’re making unnecessary purchases (perhaps those daily coffees from your favorite cafe are really adding up) and cut back on them. By setting a budget and actually sticking to it, you’ll be well on your way to greater financial security.
Pay Down High-Interest Debt
The last thing you want to do when you’re trying to get ahead financially is to incur more debt, so avoid taking out any more lines of credit or loans. Instead, focus the additional money you have from following your new budget on paying down your loans and debts with the highest interest rate. This will help save you hundreds or even thousands of dollars in the long run. Also, pull a copy of your credit report annually to check for any errors or mistakes that need to be disputed.
Explore Tax-Deferred Accounts
Finally, once you do have some cash freed up, start working towards those long-term goals. Specifically, be sure to explore some account options that will be tax-deferred — both retirement funds like 401(k) plans and Section 529 education savings plans (for your children). This way, you can work on growing the value of your assets over time and meeting your financial goals without being hit by hefty taxes in the short-term. Be sure to meet with an advisor, however, to ensure that you’re putting your money into these accounts wisely and that you’re selecting the right accounts for your needs. After all, these are not one-size-fits-all solutions.
There’s no denying that getting ahead financially is a greater challenge when you’re a single parent with just one income to rely on. However, as you can see, a little planning and careful allocation of money goes a long way. For more assistance with making your money work for you (and your children’s futures), contact First Coast Wealth Advisors today.