Having a good handle on household finances is vital for any family, but it’s especially important for single parents, whose children depend on them alone to provide a solid financial foundation and to plan for life’s what-ifs.
Keeping your financial house in order as a single parent actually may be more straightforward than you think, as long as you stick to the basics and enlist an expert’s help along the way for more complex tasks like making a will or creating a household spending plan. The following suggestions, provided by the Financial Planning Association, the nation’s largest organization of personal finance experts, should serve as a good starting point:
Make a will. Single parents absolutely must have a will, whether they’re wealthy or of more modest means, said Larry Luxenberg, a financial adviser with Lexington Avenue Capital Management in New City, N.Y. Among the things a will should do is specify who will serve as guardian(s) of dependent children and who will handle their finances should you die or become incapacitated, as well as how your assets will be transferred to your children when you die.
Build a nest egg. Do you want to live comfortably during retirement? Do you want to leave a financial legacy for your children and others? If so, set up a retirement plan and contribute to it regularly. A solid retirement plan is the cornerstone of a stable financial future.
Find a trusted ally. The choices you make now about your money and your future likely will impact you and your family for many years to come. Sometimes those decisions are best made with objective, expert input from a professional such as a financial planner (who can help with a spending plan or a retirement plan, for example) or an estate attorney (who can help draft a will, establish a trust for a child, etc.).
Keep it simple! With no spouse to share in the responsibilities that go with running a household, the more you can automate certain financial functions, the better, said Luxenberg. Set up automatic deposits into a savings plan or retirement plan, so you don’t have to worry about executing those yourself, for example, and minimize the number of credit card and bank accounts you open, so your finances are easier to track.
This article was submitted by the Financial Planning Association,the membership organization for the financial planning community. FPA members are dedicated to supporting the financial planning process in order to help people achieve their goals and dreams. Submission of this article does not imply an endorsement or recommendation of the Financial Resource Center site.