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Writer's pictureRamat Oyetunji

Financial Planning Fears Unique to Single Parents and How to Navigate Them

Financial planning can feel overwhelming for anyone, but for single parents, the stakes can feel even higher. Many single parents are the sole provider for their children, and the weight of that financial responsibility can bring unique fears that others may not face or understand.



A collage of different images depicting various single parents interacting with their children


How do you navigate those concerns while balancing the need to provide for your child, secure your own future, and take care of yourself? Below are 5 fears single parents face and practical steps to address them.


Fear #1: What If I’m Unable to Work Due to an Emergency?


One of the biggest fears for single parents is the question, "What happens if I can’t work? Whether due to illness, injury, or another emergency, the thought of losing your income can be frightening.


Financial Planning Steps to Take:


- Build an Emergency Fund: For single parents, an emergency fund isn't just smart, it is critical! Start by setting aside at least 3 to 6 months of living expenses in a savings account. This can cover rent, utilities, food, and other essential bills if you are temporarily out of work.


- Consider Disability Insurance: Many single parents don’t think about disability insurance, but it can be a lifeline in case of an emergency. This type of insurance replaces a portion of your income if you’re unable to work due to illness or injury and it is offered by many employers. During open enrollment, talk with your benefits representative to understand the different levels of disability insurance available.


- Create a Support System: Financial planning doesn't mean only using your own resources. Your financial planning should include financial support you can access such as community resources and government assistance. You may not always need these resources, but knowing they exist will help if you do need them. Knowing who can step in to help with childcare or other responsibilities can relieve some of the pressure during emergencies.



Fear #2: How Can I Ensure My Child's Future Financial Security?


Single parents often wonder how they can protect their child’s financial future, especially if something happens to them unexpectedly. The thought of leaving your child without a safety net can keep you up at night with worry and anxiety.



Financial Planning Steps to Take:


- Set Up a Will and Guardianship: People often think that wills, trusts, and guardianships are for the ultra rich, but they are not! For single parents especially, a will can ensure that your wishes for your child and your assets are carried out to your satisfaction. It gives you the peace of mind of knowing that your child will be in the care of someone you trust. A will doesn't have to be complicated or expensive, but you want to make sure you go to a reputable source/firm.


- Consider Life Insurance: A life insurance policy is a smart move, especially when your child is still fully dependent on you. Life insurance can provide your child with financial support to help cover living expenses, education costs, and other needs if something happens to you. Term life insurance is adequate and affordable. Ensure you only get insurance from established and reputable insurance companies.


- Start a College Fund: Consider opening a 529 college savings plan for your child. Even small contributions over time can grow into a significant amount, and knowing that you can ease the burden of future educational costs even just a little bit, can provide some peace of mind. Note: Although you want to give your child the best, your retirement planning should be prioritized over college planning.



Fear #3: How Can I Meet Financial Demands While Still Taking Care of Myself?


Most single parents prioritize their child’s needs above all else, neglecting their own financial and emotional well-being. But this can have long-term consequences and it is important to strive for balance. Easier said than done, but the suggested steps below can help.



Financial Planning Steps to Take:


- Create a Realistic Budget: As a single parent, your budget might be stretched thin and focused on just essential expenses, but considering self-care and personal development is important. A realistic budget, one that includes your self-care and development needs, can help you prioritize and make critical decisions about your income and expenses. As a single parent, factoring your health care, mental health, and some leisure activities, is important so you don’t burn out. But if you are already stretched thin, what can you do? Being aware that your budget should include these expenses is a first step. Find small ways to incorporate them into your budget with extra income such as bonuses or tax returns.



- Automate Savings for Yourself: Treat yourself like one of your financial priorities! Set up automatic transfers to your savings so that you’re steadily building a cushion for your needs. You can start with little amounts if that's all you can spare from your budget, and then increase it down the road. It's the habit that counts.


- Prioritize Health Insurance: Don’t neglect your own medical needs. Ensure you have health insurance to cover doctor visits, medications, and emergencies, and if you don't have access to health insurance, explore community and government program that can help. Your health and staying healthy is critical for caring for your child.



Fear #4: How Can I Ensure My Own Financial Stability So I’m Not a Burden to My Child?


Ensuring that your child won’t bear the financial burden of taking care of you in the future is a fear that keeps many parents awake at night, but it's especially concerning to single parents who do not have partners they can rely on.



Financial Planning Steps to Take:


- Save for Retirement First: Before putting away money for your child’s future, make sure you’re saving for your own retirement. Contributing to a 401(k) or IRA consistently will give you the security you need later in life and minimize the potential of relying on your child for financial support.


- Minimize Debt: Paying off debt will improve your long-term financial stability and free up money for saving and investing. Single parents need to be especially mindful of overspending and incurring debt because they want to give their children the best.


- Consider Long-Term Care Insurance: These days, adult children are finding it hard to care for aging parents like they did in the past, and the costs of healthcare or assisted living in old age keep rising! Long-term care insurance can help you cover those expenses without relying on your child or feeling like you will become a burden to them.





Fear #5: How Can I Ensure My Child Feels They Are Getting Enough While Still Being Financially Responsible?


Many single parents worry about balancing their child’s expectations and needs while still planning for the future. You want to give your child the best, but you also want to ensure you are thinking of long-term financial security.



Financial Planning Steps to Take:


- Communicate Honestly with Your Child: Children are more understanding than we often give them credit for! Talk to them about money, expenses, and explain to them (in age-appropriate ways) why certain financial decisions are necessary. Having these conversations not only model fiscally responsible behavior for your child, it can also foster gratitude and help them understand the value of money better. This isn't to imply that these conversations are easy to have! You will likely navigate feelings of disappointment and guilt, but being consistent will help.


- Focus on Experiences and Memories: Many single parents find ways to make their children feel loved even when they cannot spend a lot of money on material items. Explore ways to create memorable experiences that aren't tied to spending a lot of money, like game nights or hobbies that build lasting memories, and help your child appreciate them as much as possible.


- Manage Expectations Around Gifts and Spending: Help manage your children's expectations by introducing guidelines for how much will be spent on birthdays, holidays, and special occasions. You can turn it into an age-appropriate discussion so they can provide input and be part of the process. This can help prevent financial strain, and disappointment for your child. Explore books that help foster money discussions with children at your local library or a bookstore.



Conclusion


As a single parent, financial planning involves navigating unique concerns while balancing the need to provide for your child, secure your own future, and take care of yourself. Remember, you don't have to do it all at once. It’s not about perfection, but progress, and these steps can bring peace of mind and help you feel more secure as you navigate these fears and unique challenges of being a single parent.

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