Prudent Financial Tips for Single Mothers

Motherhood can be very demanding. There’s a reason why people say: it takes a village to raise a child. Hence, for a single mother — a one-person army — can be overwhelming. Nonetheless, she will guard her children with her life and not want her family to feel the pinch.

Single Mother Manage Her Finances

1. Make a financial blueprint

A financial blueprint helps gauge your total income and expenses. This gives a fair idea of where you stand financially and how much you should save. You may tweak your expenses accordingly. Working women should invest money in instruments that generate more income, such as systematic investing through mutual funds or equity, provided their risk appetite is high.

2. Prepare for a rainy day.

Crisis strikes when it’s least expected — what if you have to quit your job and find yourself caught short on funds? It’s critical to create a contingency fund. To build it, choose instruments you can easily liquidate when required. Look for options offering higher interest rates to women. In some banks and NBFCs, fixed deposits offer slightly higher rates to women investors.

3. Create a child education fund

As the cost of education is spiralling, your child’s higher education can be a big-budget affair. However, if you start planning for it early, you may find yourself in a favourable situation when the need arises. SIP may help generate a decent corpus — start small and top it up later.

4. Health is wealth

The cost of healthcare has skyrocketed recently, and with the pandemic wreaking havoc in our lives, a good healthcare policy is imperative. A good family floater health care plan with a high sum insured could help single mothers tackle medical expenses.

5. Go for investments

Investments help your money grow and address your long and short-term goals. Investing in a combination of fixed-return and market-linked products could be a wise option. However, it is crucial to gather information before you jump in. Seek professional help if required. It may help you choose the right investment option based on your risk appetite.

6. Buy life insurance

In case of your untimely demise, a term plan will help ease the family’s financial struggle. Get adequate coverage to manage your liabilities in your absence.

7. Balance the books

Keeping a tab of your finances helps you balance income and expenses. It reduces unnecessary expenditure, gives a true picture of your savings, and helps plan upcoming expenses.

8. Make hay while the sun shines.

Your children stand as your priority when it comes to financial planning. However, it’s equally important to create funds for your retired life. Park your money in instruments specifically meant to generate income when you hang up your boots, such as the National Pension Scheme (NPS).

Conclusion

Single mothers face myriad responsibilities — juggling work and home, insulating themselves from societal criticism, catering to children’s emotional needs — the list rarely ends. However, financial planning should top the list to protect themselves and secure their children’s future.