Being a single mom, it is very difficult to cope up with all the financial issues. You may need to become financially responsible for your kids, your family, and your parents. To control your financial life, you may need to prepare strategies that can help you to achieve success.
Managing money as a single mom is quite challenging. But with practical knowledge and proper application of that knowledge can ease up your path to complete that challenge successfully.
Here are some cool tips to get financial freedom in 2019. Being a single mom, you may follow these guidelines, focus on these goals, and flourish your financial life for 2020 and beyond!
1. Develop a spending plan
To provide a boost to your financial life, you must develop a spending plan. You should keep in mind that when you are forming a spending plan, then you should do everything to stop overspending. The first thing to do is prepare a list of everything you need, and then allot enough money for each item.
You must keep track of your current spending. Review your past spending habits and verify how much you spend on each of your basic needs.
Track your bank statement online to get a clear picture of your money flow.
You may track these 5 areas to cut their expenses:
- Food expenses
- cable/satellite service costs
- Phone services
- Insurance premiums
- Miscellaneous spending
2. Protect yourself and your family with proper insurance
Getting insured is the best way to provide security to your kids or family. As you are a single mom, it is the sole responsibility of yours to give your children enough insurance coverage. With decent insurance coverage, you can prepare your kids for their future. Your children will be safe if something wrong happened to you. You can cover their life, their education, and lots of other things if you plan accordingly.
3. Eliminate joint debt
If you have a joint credit card with your spouse, you should ask him to transfer his portion of any joint balances onto his credit card. This way both of you can pay off your credit card debt easily and on your own.
Do not leave both names on the account, or else your credit could be harmed if he misses any credit card payment. Not even a divorce agreement can change the terms of a joint credit card agreement.
4. Pay off your debts
Pay off the debts first that’ll charge you the highest interest annually. Normally, credit card debts and payday loans are the top high-interest debts that you can pay off.
Bob Hammond, author of Life Without Debt, advises –
“Concentrate on paying off the high-cost debt as soon as possible.”
Highest interest rate debts like credit card debt may cost you too much, especially when you have high balances. So, if you want to save money on interest charges, then you should pay off credit cards with high-interest rate first. This DIY debt relief option is called the debt avalanche method.
You must also focus on paying more than the minimum payment. This way, you may pay off your debts as quickly as possible.
5. Set your prime financial goals
Now that you’ve prepared a strategy to pay off your debts, the next thing to do is to ask yourself these questions.
- Do you require child support?
- Do you require a higher-paying job?
- Is it the best time to go back to school for further education?
- Do you need to change your home and move into an own/rental house?
- Do you need to invest your money? If yes, where?
- Do you need to save for your retirement? How?
Single parenting is full of sudden punches, so you must be creative and thoughtful to become prepared. Make sure you do not incur further debt, else you can’t prepare for any financial advancement.
6. Create a savings plan
Putting away some stash for a rainy day is very empowering, isn’t it?
You should have at least 3 months’ living expenses in your savings account. Create an emergency fund that can save you from sudden unemployment, a natural disaster, a major medical event, or any other unforeseen situation.
Do not use this fund for any other reason, especially for shopping. Open up a separate account for your emergency fund. Use your tax refund, bonus raises, or other income to fund your emergency account. You may even set up an auto-pay option to send money directly into your emergency fund, from your checking account.
7. Start investing within your budget
Earning money from the investment is the gateway to financial freedom. Use your hard-earned money for investing in different sectors like:
- Dividend-Paying Stocks (medium risk)
- Preferred Stocks (medium risk)
- Credit Card Rewards
- Certificate of Deposit
- Treasury Inflation-Protected Securities (TIPS)
- Money Market Funds
- U.S. Savings Bonds
- Corporate Bonds
- Municipal Bonds
- Bank Bonuses
These are some popular low-risk investment options with high returns. Apart from that, real estate investment is also another big option for you to earn money.
Few options are as follows:
- real estate mutual funds
- Home construction
- Hard money loans, etc
8. Live a frugal life
You may follow these ideas and start living a frugal life. The ideas are as follows:
- Buy used goods from online stores or garage sales before making another major purchase.
- When you’ve decided to buy a certain thing, look for it first on eBay.
- Use cheap clothes, shoes, and other stuff, avoid branded goods.
- Pack your food from home, avoid eating out at expensive joints.
- Repair clothes at home, reduce buying new ones.
Now that you know these 8 awesome tips to become financially free, share these with your kids so that they can follow your path of wisdom. You are their best teacher, show them in 2019 what they can do in the coming years and get financial freedom too.