While many single moms find solace and freedom in single motherhood, we can’t ignore that full independence comes with its challenges. One of the biggest hurdles in navigating as a single mom can be financial planning. Everyone wants financial freedom, but to achieve this worthwhile goal, careful short- and long-term planning is essential.

Developing a good financial plan depends on many factors. Among those factors are your income level, your level of disposable income, your stage of life, your debt load, and your short- and long-term goals. Debt reduction should be the main focus if you are working to restore your finances. Divorce, separation, downsizing, and even just graduating college can put your finances into a tailspin. The best preparation is to have a strategic financial plan in place so that you can weather future storms of economic turbulence.

Model for the success of a single mother

The first step in financial planning for a single mom is to assess your current financial situation. She creates three separate categories: Needs, Wants, and Wants. This will give you a clearer idea of ​​which things take precedence over others. Housing expenses like rent, utilities, and student loans are unavoidable and should be the top priority. Wishes like changing the wallpaper in the kitchen, getting the kids an Xbox, or those Godiva chocolates can wait while you get your finances in order. Wishes would include the new luxury cruise you’ve been dying to take, the new sports you’re interested in, or even the super cool arcade for the kids. This categorized list will help you create a plan to get you where you want to go financially. Over time, you will need to periodically deviate from your well-laid financial plan.

Pay the debt

One starting point that is generally a good one for all single moms is debt reduction. If your Macy’s card has your paycheck in a headlock or Visa is filling up your caller ID, this should be your main focus. Even if you haven’t started saving for retirement, it’s a better plan for paying off debt since interest rates on debt are higher and debt grows faster than savings.

Credit cards derail even the best financial plans. To reign in this unsecured debt, focus on paying more than the minimum on each card. Also, pay as much as you can on your highest interest credit card, since it’s the fastest growing balance. Try to avoid late fees like all costs. These are dollars that can be used to pay off balances.

save for an emergency

You often hear about the need to have an emergency fund. While it’s not always easy to save 6-9 months of living expenses, it’s important to have an emergency fund. The ups and downs of the economy and rising prices can financially devastate a single mother who finds herself unemployed or underemployed. Not being prepared for a disruption in income only adds fuel to the fire.

Estimate 6-9 months of household expenses and add them little by little. There is no need to feel overwhelmed. Constant saving will help you reach your goal sooner than you think. A way to do this without having to think about it every paycheck. Have your savings deducted directly from your paycheck or bank account and placed in a separate emergency fund. Make sure you can easily access the account in an emergency.

long term goals

Retirement should be a number one priority in your category of long-term goals. The going price for a comfortable retirement 10 years ago was $1 million. If you’re a later Generation X or Generation Y, then that price could easily double by the time you reach retirement age. The way to get ahead of this growth curve is to start saving now so your retirement fund can grow using compound interest.

Some common retirement vehicles include 401k, IRA, Roth IRA, and mutual funds. Keoghs or SIMPLEs are a good bet for small business owners and freelancers. Whatever the case, be sure to consult with a financial planner to determine the retirement path that’s best for you.

Financial planning can be hard work for single-parent households, especially. One way to take the sting out of saving for short- and long-term goals is to put it on autopilot. Many employers allow you to split your earnings between two or three accounts. If you take advantage of this option, you never have to worry about being tempted by money burning a hole in your pocket. Also, take advantage of programs your employer offers. Don’t overlook tuition reimbursement options and 401k matches, as this can offset educational expenses and double your retirement contributions in some cases.

Some employers also have scholarship opportunities for the children of their employees, so be sure to research all the benefits you are eligible for. Also, consider putting some of your tax refund directly into your emergency fund to make it grow faster.