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How single parents can stretch their money and raise financially savvy kids

Sep 28 2019 14:30
Sinesipho Tom, Fin24

Multi-tasking may be a single parent's superpower, but even heroes need a little help sometimes, especially when it comes to managing on a single income, says Old Mutual's Strategic Retail Marketing Manager Karabo Ramookho.

South Africa has a large number of single mothers in particular, as Fin24 previously reported, with the majority of new moms including no information about the father on their baby's birth certificate. According to Old Mutual's 2019 Savings and Investment Monitor, meanwhile, 54% of SA mothers classify themselves as single.

Of that 54%, just 20% say they get regular financial support from their child's father, 29% say "every now and then", and 50% say they get no financial support at all.

Here's Old Mutual's advice for how cash-strapped single parents can stretch their income, while also raising financially savvy kids.

Using apps

At the core of great financial planning sits a budget.  

"People think that budgeting has to be a complicated and time-consuming process, but there’s a vast array of apps that you can use, like 22Seven, that can make your life easier," says Ramookho. The app helps you track daily spending and financial goals, gives you regular insights regarding expenditure versus goals, and it's free.

It also provides nudges, which are hints and observations about your money, which are aimed at encouraging you to use your money better.

Other free apps include My Financial Life and MoneySmart.

Saving goals

According to Ramookho, a key part of being smart about money is setting savings goals that both parent and child can get excited about. "Knowing what you are budgeting for helps you to stay focused, giving you the right motivation when deciding what expenses to cut," she says. Be clear and precise about what your goals are and give them timelines, she advises.

Involve your children

Ramookho also recommends including your children in the process.

"When you involve your children in your financial journey it helps them to understand the bigger picture. While they do not have to know all the details of your income and spend, introducing them to the basics from a young age can provide them with the tools they will need when they become adults."

Partner with qualified advisers

Partnering with a qualified financial adviser can be hugely beneficial, she says. "In the same way that your kids have coaches for sports and other extracurricular activities, it is essential for moms to enlist the services of an accredited financial adviser who will coach them towards their desired financial future."

Adopting a few basic principles will also help set you up for the future you want, Ramookho says – and the most important is "pay yourself first", meaning you should prioritise savings. "As a sole provider, it’s important to protect yourself and your ability to generate an income, as well as provide for life after retirement, and for your dependents."

Construct a comprehensive financial plan

A comprehensive financial plan for a single parent should include the following, says Ramookho: a retirement plan; a risk plan that will pay out should you be unable to work due to illness or disability; cover that will pay out to your dependents should you pass on; and savings for education, emergencies and other goals such as holidays.

It is also vital to have a will in place that clearly states how you would like your estate to be handled, who should act as a guardian for your children and other wishes that you would like to be followed in your absence.

Sometimes, the best laid plans (or budgets) can get knocked off course by an unexpected school activity for the kids or an emergency dental procedure. At times like these, your credit card may seem like a quick solution.

"If you find yourself taking on debt to service monthly expenses or meet short-term obligations such as emergency expenses, make a series of conscious decisions along the way to reduce your expenditure and channel even the smallest savings towards paying off credit cards or personal loans as soon as possible," she advises.

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