The Single Life: What You Need to Know About Parenting Solo (Planning as a Single Parent)
April 8, 2015 | Home and Family
We’re all familiar with the phrase “It takes a village to raise a child.” But when you’re a single parent, that village may often feel like a party of one. At the end of the day, all of the important decisions about your children’s future and yours fall on your shoulders.
That’s the way Julie Prince, a wealth management advisor for Northwestern Mutual and a single mom herself, describes the financial challenge of raising children on your own. “Not only are you the sole provider of care and emotional support for your children, you also may be the sole provider of their financial support. This responsibility can seem overwhelming at times, which is why smart financial planning is especially important for parents without a partner,” Prince said.
If you’re raising children by yourself, you’re not alone. Today, more than 30 percent of households are headed by a single parent with children under age 18, according to the U.S. Census Bureau (“America’s Families and Living Arrangements 2014”).
Prince believes that the financial planning concerns of single parents aren’t that much different than for couples parenting together. However, she says, “Everything is more pronounced because there’s no second person to fall back on. That makes it even more crucial to build a safety net for you and your children sooner rather than later.”
Here are some of the first things Prince suggests single parents should consider:
1. Your children’s future is priority one. One of the most important things you need to consider is who will take care of your children in the event you can’t due to illness or death. “You’ll want to name a guardian who shares your values, goals and parenting style—someone who is also young enough to love and nurture your kids until they reach adulthood,” said Prince.
To make sure your wishes are known and followed, you need to have the right paperwork in place. This includes a will, which names the person(s) you’ve chosen as legal guardian for your children and specifies how you want your assets handled in the event of illness or death. It also includes financial and health care powers of attorney, which specify whom you want to handle your financial and health care decisions if you become incapacitated or die; as well as a living will, which lets your doctors know how you want to be treated medically if you can’t speak on your own behalf. “Having these vital documents in place will ease your mind and help ensure that your children get the love and care you want for them if you’re not around to provide it,” said Prince.
2. Address “what ifs.” Check to make sure you have adequate health, life and disability income insurance to protect your family’s future in the event of unforeseen events. “Life insurance can help ensure your children can continue to live the lifestyle you want for them; disability income insurance can help replace some of your income should something happen and you’re no longer able to work due to an injury or a prolonged illness,” said Prince.
3. Set priorities. Like every parent, you’re likely to have competing goals. But unlike two-parent families, you have only one income to fund your family’s needs and wants. Prince suggests you make a list of “must-haves” and “nice-to-haves” for your children. This will help you prioritize how best to allocate your cash flow.
“For example, let’s say your child has the opportunity to attend a private school. Is this a need or a luxury? That depends on your children and their well-being,” said Prince. “Take a look at the big picture, and decide what’s most important for your family. Then let that guide your spending and savings decisions.”
4. Pay yourself first, then your kids. Of course you want what’s best for your children, so saving for their education may be a priority. But if money is tight and you need to make a choice between saving for retirement and funding college for your kids, most often you should choose saving for retirement first. “When it comes time for them to go to college, your children will have financial options beyond parental support, like work, loans and scholarships. However, there’s no such thing as a retirement loan,” said Prince.
5. Give yourself a break. Single parents are often pulled in many directions at once, which can lead to high levels of stress and poor health. “Set aside time for yourself each day to recharge, even if it’s just taking a few minutes to call a friend. Equally important, don’t be afraid to reach out to your ‘village’ of family and friends if you need support,” says Prince. “You’ll be a better parent and provider if you do.”
The challenges of parenting solo are very real. Fortunately, so are the rewards. By taking the important step of creating a sound financial plan, you can help ensure that you and your children have everything they need for a happy and successful future.