When it comes to finances and everything else in life, sometimes things are great, and sometimes they’re not. What’s different is that single parents face those ups and downs on their own.
You love your children and want to provide for them, now and in the future. A great way to do that is to carefully think about their needs (and your own), now and in the future. When there is no second parent to pick up financial or child-rearing slack in your household, it’s even more important to pay extra attention to careful financial management. Single parenting costs a lot.
Here are a few smart financial strategies that can work for anyone, but that might be particularly useful for single dads.
Set and stick to a budget
One of the most important things you can do to keep your finances in order is to set and stick to a budget. That’s especially true if you are transitioning from two incomes to one. Even if you’re not the custodial parent, you still have a responsibility to your kids.
The quickest way to financial difficulties is to spend more money than you earn. Living within (and ideally below) your means will start you off on the road to financial security.
Not knowing what you earn or how much you spend is no excuse. When you actually put the numbers down on paper you might be surprised at some of the little things that are part of your spending habits. Try a budgeting app if you’re not sure where to start or how to set it up.
A budget is a tool, not an instrument of deprivation. If you’ve never used a budget before, considering giving it a try. Some people rave about the money they “find” when they finally start tracking where their dollars go.
I always say that the purpose of a budget is not to punish you or prevent you from buying stuff. The purpose of a budget is to stop spending money on things that aren’t important to you so that you have money to buy the things that ARE important to you.
I talked to my friend Charlie, who is a single dad in his 30s, and asked him what budgeting tips he’d give other single dads. His reply:
“Make a budget and try to make a plan of where you want to be financially down the road. Think about future expenses you will have and start putting money away now. Also, find a way to do something for yourself every once in a while to reward yourself for working so hard as a provider. Dads don’t receive the same credit as moms do but we are just as important in raising our children and creating a positive environment to grow.”
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As you review your budget, you’ll find that there are only two ways to stretch your dollars farther:
- Spend less
- Make more
While an initial review of your spending habits may uncover a few things that you don’t mind cutting from your budget, at some point you’re going to run out of cable bills, Starbucks coffees, gym memberships, and other discretionary expenses to trim. You’ll be left with things like rent, gas and car insurance that are true necessities. At that point, your only option is to increase the money you make.
While single dads have a median income of about 50% higher than single moms, their earnings don’t typically match that of two-parent households. Take advantage of any opportunities that come along to increase your income and your ability to provide for your kids.
That might mean starting, finishing or going back to school. It could mean picking up a side hustle for extra income if your parenting schedule allows for it. Or you might look for a better-paying job, or ask for a raise or promotion from your current employer.
Set aside funds for short-term emergencies
It was widely reported in 2018 that four in ten Americans can’t cover an unexpected $400 expense. Don’t be that guy.
Emergencies aren’t an “if,” they’re a “when.” Everyone, and I mean everyone, faces an unexpected expense at some point. Being ready for it is easier than going into costly debt over it.
Start a fund for short-term emergencies. Consider doing this even before you start paying down debt or investing for your future.
One way to build an emergency fund is to start with small, achievable goals – say $500. When you reach each goal, set your sights on the next level – say $1,000. Then work toward enough money to live on with no income at all for three months. If you can get there, congratulations. But there’s no need to stop. Why not shoot for six months’ worth?
How do you put money away if you’re short on funds? You’ll have to get serious and a little creative. Here’s one of my favorite strategies: Any time you get a raise, bonus or additional income, consider putting it into a separate savings account immediately. You’re already living your life without that extra money so you could just pretend you never saw it.
Ditch debt and other unnecessary expenses
Debt stands in the way of financial freedom. Why carry it around? I’m in the camp that believes your primary residence should be your only debt if you have any debt at all. Get rid of credit card debt, student loans, and car payments.
Depending on where you’re at right now, this might seem like a daunting or nigh-impossible task. Take heart – millions of other folks have faced the same challenge and won, and so can you.
The two basic strategies for getting rid of debt are:
- Snowball: Start with the debt that has the smallest total balance. Pay that off first, then move on to the next smallest. Research shows that this method is the most motivating.
- Avalanche: Start with the debt that has the highest interest rate. Pay that off first, then proceed to the one with the next highest interest rate. This method has the potential to save you the most money in interest charges.
There are pros and cons to both methods and it doesn’t matter which one suits you more. Once you’ve paid off any debt, you apply its monthly payment to the next debt.
Protect your kids’ future if the worst were to happen
If you are the breadwinner for your family, one of the most important things you can do for your children is to make sure they’re taken care of in case the worst happens. Single people do need life insurance, especially if they’ve got kids who depend on them financially. Term life insurance can be very affordable, and it gives your family a financial safety net. A 30-year old man in excellent health could get a 30-year, $300,000 Haven Term policy issued by MassMutual for just $30.63 per month.
A life insurance policy payout can help pay for childcare, housing, day-to-day living expenses, college tuition and books, or other financial needs your beneficiaries may have after you’re gone. Keep in mind that minors cannot receive a life insurance payout directly, so if your beneficiaries are minors you will need to also name a custodian.
While you’re protecting your kids’ financial future, don’t forget to also take care of yourself. Remember that the most valuable asset you can share with your children is your time. Be sure you give them plenty of that, and be a part of their lives as much as possible.
Dan Miller runs Points With a Crew, a site that helps families (especially larger families) travel for free/cheap. He’s been featured on Yahoo! Travel, the CBS Sunday Morning Show and Wheel of Fortune. He lives in Cincinnati with his wife and 6 kids.
The opinions expressed in this article are the author’s own. Haven Life Insurance Agency offers this as educational information only.
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