Although money rules to be successful haven’t really changed – spend less than you earn, save and invest for your future – they are slightly different for single parents. Single parents must be able to handle unexpected home expenses, childcare, school related expenses, and so much more, all on one income. Hence, while the basics of money management are generally consistent across the board, single parents need to steer clear of common beliefs in order to avoid five major money mistakes. Read on!
Mistake 1 – Saving for College
As single parents, the desire to prepare kids for the most successful future possible is strong. We don’t want our kids to struggle financially, emotionally, socially, or educationally. However, it is important that single parents not save for their kid’s college education unless they are on track to retire comfortably, have a 6-month emergency fund saved up, and are able to comfortably pay for it, without sacrificing their own quality of life.
Why? Kids can go to college, with or without your help. They have scholarships, grants, and their own ability to work that can be used to cover college expenses. With advanced credits, some students may even be able to leave high school with a 2-year degree. Nice! For those reasons, if you cannot easily and comfortably save for college then don’t fret. Your child will still be ahead. With a parent like you at their side, they are sure to make smart decisions that will help make college affordable and beneficial for everyone in the family.
Mistake 2 – Not Saving for Retirement
This is a HUGE one. The goal of a single parent is to prepare their child for future success without being a burden when they reach their golden years. The way to do that is to save for retirement, now! You should be saving at least up to your company match each year, and altogether a total of 15% of your annual income. This is extremely important and takes priority over any other financial goal you may have. Don’t say that you can’t or don’t have any money to save, find a way! There are no programs, scholarships, grants, or magical fairies that will help you enjoy being retired. In fact, if you don’t save, how can you retire?
The best gift you can give your child is a secure future for yourself. The sooner you start saving, the faster your money will grow. Check out my resources page for more help with this. Start saving today!
Mistake 3 – Buying Out of Guilt
Sometimes parents want to make up for being absent, or not having an absent parent in a child’s life, by buying things. Big mistake! Kids love you when they know you care. Spending quality time with your child will beat any toy or gadget that could ever get them. Dishing out cash to fill a void or make-up for the situation you are in is not the solution. Spend wisely, save consistently, and invest intentionally to give you and your child a solid financial foundation.
Mistake 4 – Neglecting Self-Care
Give yourself a break! I mean it. Single parents often find themselves devoting so much time to their kids that they forget to take care of themselves. Don’t do it! It’s not necessary to spend a ton of money, or any for that matter, but you do need to make time for yourself. Even if it means hanging out with a friend or asking family to keep the kids for a few hours, you need to decompress. Neglecting self-care translates into a mistake because if you are stressed out and not practicing healthy habits, it will eventually translate into major medical bills. You don’t want that! So, check out this post on taking care of yourself and make self-care a priority too. You’ll thank yourself now and later.
Mistake 5 – Not Teaching Your Kids About Money
Its not a secret. You’re single. The budget has tightened. Things are not the same as in other households. Be honest with your kids. Talk to them about how things have changed if you’ve endured a divorce. If you’ve always been single, explain to them why life is a bit different for your family. They can handle it and deserve to know the truth.
I show my kids the budget and talk to them regularly. When they want something, instead of saying “no,” or “I can’t afford that,” they hear my mantra, “I have to determine how to afford that,” or “I don’t have the cash for that, yet.” This helps kids learn about patience, needs, wants, financial responsibility, accountability, and making good choices. It also opens opportunities for you to teach them even more. For example, you can let them help manage the budget and allocate funds for household needs. That alone save tons of headaches since they won’t ask you to buy unnecessary things if they are aware of the family’s financial situation. I started these conversations when my kids were 5 years old and they are better because of it. The desire to start a food stand and sell things hit my youngest hard and has resulted in many business ventures that have provided invaluable learning experience. Tell your kids the truth and teach them what you wish you had learned when you were a kid. It makes for much more appreciative and gratuitous kids both now and in the future.
There you have it! Five money mistakes to avoid. There are tons more to consider but these are the biggest, in my opinion. What do you think? What mistakes would you add to the list? Please share in the comments below.
Happy Saving! Live Well!