1. Get Organized: Organize your unpaid bills, make notes on your calendar for due dates, and keep tabs on your checking account balance. Organization 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.
2. Make a budget: Make a list of your income sources—your paycheck, any child support, alimony, social security payments, other government aid or life insurance payments—as well as a list of expenses. Track your spending for several months to get a feel for what to include in your budget. Then make a plan for paying off debts, paying bills on time and contributing to savings goals.
3. Build an 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. Supplement your emergency fund with adequate insurance to protect against financial disasters.
4. Stay motivated to budget: Set a meeting with yourself 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.
If you are thinking about, going through or recently divorced, these 4 tips can help get you on track:
1. Cancel joint accounts: Make sure to cancel any joint accounts held with your spouse. Cancel and reestablish credit cards, cable service, cell phone service, etc. in only your name. Even if you trust your ex-spouse, starting with a clean slate is the best way to kick-start your future.
2. Plan for childcare expenses: 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.
3. 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.
4. Make a child support plan: If you’re paying an ex-spouse, make sure to factor it into your budget. 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.
Adjust your lifestyle: You may need to seek a higher-paying job or 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. Moving to more affordable housing can save you a lot of money, as housing will likely be one of your largest expenses.
Learn to say no: After you make your budget, you’ll probably discover discretionary spending that can be cut to free up more money for debt repayment or savings. Learn to say no to yourself and your kids so you can trim the fat from your monthly spending. Your kids might not understand your financial situation and it’s okay to have an honest discussion about finances with them. Resist the urge to buy your children things to make up for being a single parent.
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.
James De La Torre has conducted federal benefit and financial planning seminars all over the country. He is a key note 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 or Financial Planning and is a member of the Financial Planning Association. Please direct questions or comments directly to James at firstname.lastname@example.org.