I’m a single mother of color and only recently started taking my finances seriously. Motherhood made me aware of the need to get my financial affairs in order. I knew nothing about investing, retirement planning, entrepreneurship, and budgeting for a long time. My financial literacy is far better than it was many years ago, and I’m here to share what I learned and applied with other single parents. The goal is to help them improve financially through knowledge. Here is how to manage money as a single parent.
Develop a Debt Elimination Plan
One of the best ways to manage money as a single parent is to develop a debt-elimination plan. Get copies of your credit report from these credit bureaus; TransUnion, Equifax, and Experian. Review your credit report and check for errors. Dispute any errors you see by regular mail or online. Discuss the debts on your credit report that do not belong to you or that you already paid. Contact your creditors and work out a flexible payment plan. Avoid taking on new debt while you’re paying off your current ones.
Build Emergency Savings Slowly
Emergencies happen, and since you’re your child’s only provider, it’s crucial to build emergency savings. Open an online high-yield savings account because the interest rates run between 1 and over 5%, which is higher than the savings accounts at traditional banks. Automate a portion of each check toward savings every pay period.
Don’t Spoil The Kids With Things
It’s never a good idea to drain your finances and go into debt to spoil your kids with the coolest things they want. Kids should learn delayed gratification so that they can build a solid financial future and the importance of saving for the things they want. When you spoil them with things, they become entitled and start believing that others must give them anything they want without restrictions.
Increase Your Income
You can only cut spending so much, and sometimes the better option is to increase your income. Meet with your supervisor to discuss more advanced positions within the company and learn how you can position yourself for those roles. Negotiate for a higher salary with your supervisor if you’ve worked at your job for a few years and have excelled in your current position. If advancement is still not happening after you took these steps, update your resume and look for a new job. You can also do a few side hustles to earn extra money.
Buy Life Insurance
You have children who depend on you, so you should purchase life insurance so your loved ones can pay for your funeral and burial expenses should you pass away. Term life insurance is the most affordable form of life insurance. You purchase a policy for a certain number of years and if you pass away before the policy expires, your loved ones receive the benefits.
Use Surplus Funds for Savings and Investments
If you receive a bonus or raise at work or a tax refund, use those funds to increase your savings and investments. Other ways to use your surplus money include:
- Starting an online business
- Opening a retirement account
- Paying for kids’ school activities
- Debt payments
- Inexpensive family vacations
Don’t Let Fear Keep You From Dreaming Big
It is financially challenging at times as a single parent, but don’t let it keep you from dreaming big and setting the financial goals you want. Maybe you want to buy a home but the high prices discourage you. You can come up with a savings plan for the new home and begin saving now so you’ll be in a better position when you’re ready to buy a home. It may take longer to achieve certain goals because of your current situation but with discipline and the right attitude, you can do it.
Educate Yourself
Financial literacy is an important tool in your journey to financial stability. Read good books about personal finance from authors of color who understand the cultural factors that affect your financial situation and how to overcome those barriers. Here are a few titles to get you started:
Spend Well, Live Rich by Michelle Singletary
How to Get Good With Money by Tiffany Aliche
Rich AF: The Money Mindset That Will Change Your Life by Vivian Tu
Financially Lit: The Modern Latina’s Guide to Level Up Your Dinero and Become Financially Poderosa by Jamese Torres
I Will Teach You to Be Rich by Ramit Sethi
In addition to the books, head to Youtube to increase your financial literacy. Here are some of my favorite channels on this topic:
Our Rich Journey: This channel is headed by a black couple, Ammon and Christina, who were able to retire early as millionaires through wise investments and good financial habits.
The Table with Anthony O’Neal: Anthony O’Neal used to work with Dave Ramsey before starting his own ventures. His channel includes interviews and personal finance lessons on topics such as budgeting, saving money, investing, and estate planning.
Wealth Twins: This channel is headed by twin sisters, Nadia and Nicole, who worked in the corporate world before quitting to retire early. I like their easygoing and humorous approach to teaching about finance. They’re also compassionate and meet the viewers where they are.
The Money Guy: This podcast is hosted by Bo Hanson and Brian Petersen, who are financial advisors. They discuss investing, budgeting, retirement, and estate planning.
Michael Bordenaro: I call this my “reality check” channel because he doesn’t sugarcoat the truth about the state of this country’s economy. He busts myths about our economy that mainstream media outlets keep telling us to pacify us. However, he offers financial nuggets of wisdom to everyday people that can help them.
Buy Groceries That Are On Sale in Bulk
Write down a list of all the pantry staples you use the most and then watch out for sales on these items. When they go on sale, buy them in bulk. This keeps you from going to the store too frequently and it saves you money long term. If there are certain new staples you’re trying for the first time, don’t buy these in bulk just because they’re on sale. Only buy a few and everyone likes them, add this to your bulk buying list.
Start Investing Now
When you invest, you grow your wealth in the future. Open an online brokerage account through firms such as Vanguard, Charles Schwab, and Fidelity. Deposit some money into the account and then buy a few stocks. These stocks will earn you interest on your original deposit, and this means more money for your future. You can also purchase stocks and bonds for your child so he can build wealth as an adult.
Knowing how to manage money as a single parent can put you on a clear path to building wealth. It gives you the peace of mind in knowing that you can provide for your child with confidence.
