· Cancel joint accounts: If you’re recently divorced, make sure to cancel any joint accounts held with your spouse. Cancel and re-establish credit cards, cable service, cell phone service, etc. in only your name. Even if you trust your ex-spouse, starting with a fresh clean slate is the best way to start your money management plan.
· Make a budget: Make a list of all your income sources—your paycheck, child support, alimony, social security payments, other government aid, etc. Do the same for expenses. To help, track your spending for several months to get a feel for what to include in your budget. Once you’re comfortable, make a plan for paying off debts, paying bills on time, and contributing to savings goals. Don’t forget to budget money for savings and entertainment.
· Stick to the budget: Set a meeting with yourself every week to pay bills, balance your checkbook, and take care of other financial housekeeping items. Watch your savings grow and reward yourself when you hit important savings milestones.
· Get organized: Organize your unpaid bills, make notes on your calendar for due dates, and keep tabs on your checking account balance. Paying your bills on time can save you a lot of money when you’re able to avoid late fees, overdraft charges, and automatic payments for services you no longer use.
· Build a liquidity (emergency) fund: Without a second income to fall back on, an emergency fund is vital to your family. Your emergency fund can help you pay for surprise medical bills or car repairs, or it can fund your living expenses if you lose your job or incur expenses you haven’t budgeted. Supplement your emergency fund with adequate disability insurance to protect against financial disasters.
· Plan for child care expenses: As a single parent, you’ll likely need to seek out child care while you’re at work. Do research to determine the best option for your family’s lifestyle and budget, and consider an alternative arrangement, such as hiring a family member, sharing a nanny with neighbors, or entering a babysitting co-op.
· Adjust your lifestyle: You may need to seek a part-time side job to supplement your income, or you may even consider going back to school to improve your earning potential. Newly-single parents often have to make the choice to downgrade their housing, with housing being one of your largest expenses. Moving to more affordable housing can save you a lot of money.
· Learn to say no: After you make your budget, you’ll probably discover some discretionary money that’s left over. Learn to say no to yourself and your kids in order to trim the fat from your monthly spending. Your kids might not understand your financial situation—and that’s okay—have an honest conversation with them about finances. Resist the urge to buy your children things to make up for being a single parent.
· Get the kids involved: If your kids are old enough, use your financial situation as an opportunity to teach them about money management. Task them with cutting coupons or give them an allowance in exchange for helping around the house.
· Make a child support plan: If you’re paying an ex-spouse, make sure to factor it into your budget and make a plan for the extra money once your payments end. If you’re on the receiving end, you’ll need to make a plan for the loss of money when your ex-spouse’s obligation ends. If your ex-spouse experiences an improved financial situation, you may be able to petition the court for an increase in support.
· Save for future goals: Even when money is tight, saving for retirement and your children’s education is highly important. Compound interest can have a magical effect on savings over time, but only if you start early. Make a savings plan for these and other future goals so you’ll know if you’re on track with your budget each month.
Money management is an ongoing process, and you’ll likely hit some bumps in the road. The important thing is to keep up with it, no matter how tedious and labor-intensive it may become. Managing your family’s finances can be more difficult on your own, but it’s not impossible.
James De La Torre has conducted federal benefit and financial planning seminars throughout the country. He is a keynote speaker at federal conferences and works with federal professional organizations on ways to improve the communication of federal benefits to their membership. Jim has appeared as a guest on “Fed Talk” on the Federal News Radio network, discussing the gaps in federal benefits and the financial impacts employees face. Jim holds a Charter Retirement Planning Counselor’s (CRPC) designation from the College of Financial Planning and is a member of the Financial Planning Association. Please direct questions or comments directly to James at firstname.lastname@example.org.