Being a single parent and raising a child is not quite easy. Handling a personal and professional life could be taxing in many ways for a single parent. And in terms of finances, it is a burden on the shoulder of one considering the number of bills for several purposes one may have to shell out.
Well, life isn't quite easy for all the single mother's out there and while they are definitely doing a great job at what they do, we have some amazing financial tips for such mothers this women's day.
Plan a budget
As we all know, it is always a good idea to plan your finances well in advance. Having a clear idea of your present finances will definitely help you have a clear picture of your future. Keep a basic check on cash inflows and outflows of the family. Compile all the sources of income of the family and you get an idea of the inflows.
Next step would be to check the outflows like loans and EMIs, any kind of investment made in your name, or family expenses. With this, you have a basic idea of how much you need to work on your spendings. This will also tell you if you are making unnecessary transactions.
Once you know all your incomes and expenditure, keep aside a sum of money in case of emergency. Also, do not forget to label it 'Emergency Fund.' Make a list of situations during which you can use this fund. For example, medical emergency, child's school fees or in dire situations. Experts say that an emergency fund should have at least six months worth expenses.
This fund can also be used when the markets are not so great and one does not have a job. This will keep you covered for a couple of months. Also, keep in mind to put the money back once you have it. Experts suggest that emergency fund should be invested in high liquidity instruments that earn you maximum benefits.
Pondering over the major future demands and setting a long-term goal will definitely help you to bring your financial life back on track. Think what could be it? Your child's educations, medical expenses, buying a home or a car, retirement savings or things you ever wanted to do as a child.
Prepare a plan for your goals and calculate the number of funds you'd need to achieve them. Clubbing all your short and long-term plans you could start investing in SIPs and build a corpus.
For starters, you can begin with investing in a small amount and probably increase it subsequently. SIPs, in case of long-term goals, are rewarding as it grows over a period of time. The amount you receive is added to the principal amount of investment each year, compounds the interest and generates returns.
Life & medical insurance
Well, life insurance is not considered as an investment but is important in the long-run. Getting life or medical insurance is equally important just like any other investment. This not only gives you the financial security but also to your dependants.
It ensures that your dependants have enough funds to take care of themselves in case of any unfortunate event. Medical expenses are quite high nowadays and buying health insurance will cover all these expenses.
While we do suggest you to watch your expenses, an occasional splurge isn't a bad idea, to be honest. However, we also suggest you to take baby steps to fortify your finances and earn returns in the future.