Tune up your finances
It’s probably the hardest job in America and it doesn’t pay a salary, but millions do it anyway. The job is single parenting. About 13 million one-parent households were counted in 2006, the last time the U.S. Census Bureau tallied them.
Adjusting to life as a single parent involves facing numerous energy-sapping challenges that may not have existed before your divorce or your spouse’s death.
If you’re a newly single parent, you’ll have to come up with a balanced strategy that meets the emotional and financial needs of yourself and your family.
It’s no easy task, but these tips may help you avoid burnout and realize your future goals.
- Create a roadmap for your new life
- Control spending and have fun
- Reevaluate financial documents
- Set up an emergency fund
- Take advantage of tax breaks
- Consider a new career
- Don’t be afraid to ask for help
Create a road map for your new life
If you’re co-parenting with an ex-spouse, you’ll have to cultivate a relationship that is more organized than when you were married.
This can be difficult when one parent finds the divorce hard to accept, but it’s a critical step in transitioning to something akin to a business partnership, especially when children are involved.
“It requires a certain conscious planning ahead in terms of how you’re going to communicate with each other and what kind of schedules you’re going to have,” says Carolyn Ellis, author of “The 7 Pitfalls of Single Parenting.”
In her book, Ellis advocates an even-keeled style of communication devoid of hostility or even negative nonverbal social cues, particularly when the children are present or within earshot. “Parents who demean the other parent to their children typically do it to foster a greater sense of loyalty to them. This strategy can backfire in the long run,” she writes. “Making children choose a side between Mom and Dad is unhealthy for their long-term happiness and success.”
Cultivating a business-like relationship with a former spouse is a good start, but it’s also critical for you to develop a forward-looking self-image.
Ellis, a certified divorce coach based in Toronto, says it’s very easy to remain emotionally stuck if you don’t have a new vision of your post-married life.
“Without that new vision, it’s like trying to drive a car, but you’re only looking in the rearview mirror,” she says. “The most amazing opportunities could be right outside in front of you.”
Control spending and have fun
More than likely, you’ll be on a leaner budget, which means you’ll need to keep tight tabs on where your money goes.
“Work on the spending plan,” says Ellie Kay, an author and financial adviser based in Palmdale, Calif. “It’s the most important thing for a single parent because they are carrying the emotional load and oftentimes the financial load of the whole family.”
Sometimes single parents lack financial accountability, Kay says, so it’s important to find a “money buddy.”
This person is a mentor who knows how to set up and stay on a budget and with whom you can discuss financial ideas. Your money mentor may also be able to advise you on how to pay down debt.
However, if you’re in serious debt trouble, you may need to seek professional help from an outside organization.
“I recommend that single families in great financial stress run, not walk, to an organization like the National Foundation for Credit Counseling,” Kay says.
The NFCC offers free or low-cost help from certified counselors.
If you’re co-parenting with an ex-spouse and you’re the custodial guardian, you’ll likely be spending most of the time with your children. Even though you may be on a tight budget, that doesn’t mean you can’t find ways to have fun with the kids.
Shop the sales, clip coupons and buy generic when you can.
Take your kids out for cheap dates when there are special deals. Oftentimes, chain restaurants and pizzerias have two-for-one or children-eat-free nights that will help stretch your budget.
Public libraries are another no-cost resource for books, movies and music.
Kay says single parents can also pare down their health-care bills by taking advantage of the many community and state-based programs that provide checkups and low-cost immunizations for minor children.
Reevaluate financial documents
As a single parent, it’s important that your children be provided for should something happen to you or your ex-spouse. Life insurance is an inexpensive way to take care of this.
Ensure that your ex-spouse has life insurance and that he or she doesn’t allow it to lapse, says Steve Stanganelli, a Certified Financial Planner with Focus Capital Wealth Management in Bedford, N.H.
“Unfortunately what happens is the paying spouse lets the insurance policy lapse because they don’t want to pay the premium,” he says. “If something unfortunate happens, that could leave the recipient spouse in no position to take care of the household if there is no other insurance.”Stanganelli suggests negotiating a provision into your divorce settlement that allows you, if you are the custodial parent, to be the owner of the policy paid for by your ex-spouse.
Tune up your finances
Contact an attorney to advise you about how to properly title beneficiary designations on the insurance policy. Minor children can’t own or control property, but you can make provisions for their care by establishing a life insurance trust where the trust is named as a beneficiary for the benefit of the children.
While you’re at it, revise your will and set up an estate plan with the attorney. You will want to designate guardians for your children in the event something should happen to you.
Any retirement accounts you hold also need to be reviewed to make sure that beneficiary designations have been updated. If you neglect to do this, you could unintentionally have assets or insurance proceeds go to your ex-spouse.
Set up an emergency fund
Setting up an emergency fund was tough while you were married, and it will be even tougher now that you are single.
Still, try to divert funds from your paycheck, spousal support or even child support into a liquid account such as a money market or savings account for emergency purposes.
If you receive a lump sum payment from your divorce settlement, avoid being tempted by what CFP Steve Stanganelli calls “the sudden wealth effect.”
“The person receives the money and decides now it’s time to go out and buy a new car,” he says.
“Any large sums of money should immediately be deposited into a liquid account before you decide to purchase a big-ticket item or any other kind of investment.”
Take advantage of tax breaks
Believe it or not, Uncle Sam does have a strong benevolent streak judging from the number of tax breaks that are designed to help you get ahead.
In addition, the IRS allows for some child-friendly 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.
The credit phases out for those with incomes above that level.
In addition, lower-income earners with an adjusted gross income of less than $38,646 may qualify for the earned income credit, or EIC.
Consider a new career
Many families today rely on dual incomes, but perhaps you had postponed your career to raise your family or serve as a homemaker.
In that event, you may need to take classes to earn a postgraduate degree or to receive professional certification, which can be expensive and time consuming.
Solutions exist. Sometimes courts allow for “rehabilitation maintenance,” which is a negotiated provision in the marital settlement agreement requiring one spouse to pay for the other’s career-based training.
“It’s becoming more and more common where one spouse pays the other spouse for training that might be needed to get them over the hump,” says Stanganelli.
But before spending time and money on a career you may not like, it may be beneficial to consult with a life coach or some other career adviser.
A coach can assess your key abilities and at least point you in the right direction.
Don’t be afraid to ask for help
If it really takes a village to raise a child, then millions of single-parent families have their work cut out for them.
Single parents are pulled in every direction, which can lead to high stress levels and poor health.
Where you once divided duties with a marital partner, you’re now responsible for making all the major personal, financial and legal decisions, and that can lead to a perfect storm of stressors, says Ellis.
Single parents are often reluctant to reach out for help out of fear that it shows vulnerability or weakness. Sometimes pride prevents them from taking advantage of support networks, friends and family, but all are effective tools to reduce stress.
“Being able to say ‘this is beyond me’ and ‘I need support’ is an important first step for people to take,” Ellis says.
“What’s always amazing to me is when single parents reach out for help, they can’t believe how many people are willing to support them and all they really needed to do was ask.”
She adds that setting aside time for yourself is essential for maintaining good mental health and recharging your batteries.
“Self-care is paramount, whether it’s taking five minutes to go outside or picking up the phone and calling a friend. Do something everyday that is nurturing and supportive to you.”