Financial Safeguards for Single Parents

Single parents face all the same financial challenges that two-parent families do, but they typically have less time and money to work with. Though the thought of making ends meet and achieving financial goals on one income may be daunting, you can take steps to improve your chances of success.

Start by getting your finances on solid footing as soon as you know you'll become a single parent. That includes adjusting your spending to match any changes in income, building a substantial emergency fund, and starting or continuing your financial education so you'll be prepared to make wise financial decisions for your family.

Child care is often a single parent's biggest expense. Inquire about child care financial aid if you need it. And don't forget to take advantage of the Child Care Credit and, if it's available to you, an employer-sponsored dependent care account. In fact, there are a number of tax breaks that put money back in qualifying parents' pockets.

When planning for the future, save for your retirement first—you have other options for paying for college, including financial aid, student loans, and part-time work. Here, too, the government pitches in by allowing credits and deductions for education-related expenses.

All parents should carry disability insurance and life insurance, but this protection is even more crucial when there's only one earner in the home. And, even though the odds are on your side, you must create a will that names your child's guardian and the person who will manage your child's inheritance until he or she is an adult. A power of attorney/advance directive appoints someone to make decisions for you should you become incapacitated. Though it may be unpleasant to think about, you will gain peace of mind from having these documents in place.

 

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