Single Mom Monday: 5 Financial Tips For 2013
Girl, I know money gets tight sometimes and it seems like you are robbing Peter to pay Paul! Whether you’re saving to send your child to college, buy a house or retire early, if you take baby steps, you can get there! Here are some financial tips I found that may help you stay on track:
1. Track your income and spending! It’s as simple using an Excel spreadsheet to keep track of how much you spend. Remember, it doesn’t matter how much you make, it matters how much you spend! By writing down where your money is going, you can see where you might be wasting money (eating out adds up) and where you can trim expenses.
“Sometimes clients think, ‘If I don’t think about it, and I don’t look at it, everything will be OK,’” says Court Creeden, a MassMutual financial professional and founder of Parent Financial, a financial planning firm in Charlotte, N.C., that specializes in working with families. “Until you get a clear handle on how much you make and how much you’re spending, you’re not going to get anywhere,” Creeden says.
2. Make sure you have adequate life insurance coverage. Of single moms, 39% say if they died, their families would be in financial trouble immediately, and an additional 33% say their families would be able to get by for only several months, according to 2011 research by LIMRA. As a grown ass kid, who still asked my mom for money up until her death, I can say that her life insurance helped me, my brother and sister after she passed. Don’t be afraid to confront the inevitable, as a parent, life insurance is a must!
3. Build an emergency savings fund. Easier said than done, believe me I know! You ideally, should have enough savings to last for four to six months in case you lose your job or other emergency, and up to a year if you’re in an industry with heavy layoffs. Don’t wait until the end of the month to see how much is left over for saving. Decide on an amount, and transfer it to savings at the beginning of the month. If you think you don’t have enough money to save, look back at your budget sheet and cut any luxury, like cable TV or eating out! it’s tough, i know, but it’s tougher to lose your job and have no savings!
4. Take advantage of tax breaks. If you’re a single parent with a modified adjusted gross income less than $75,000 per year and file as head of household, single or qualifying widow or widower, you may be eligible for a tax credit of up to $1,000 for each child under the age of 17. In addition, lower-income earners with an adjusted gross income of less than $38,646 may qualify for the earned income credit, or EIC. For families with college-age children, the IRS also provides higher education-related tax credits as well as a tuition and fees deduction.
5. Make intelligent use of credit cards. Listen, I’m not above getting caught up in a 50% off sale at Belk, but really, unless you have the money to pay off whatever you buy right away, you should reserve your credit cards for financial emergencies! I learned this lesson the hard way, every dollar you spend on credit cards must be paid back and it will cost you more than a dollar!!