Getting your finances in order can be overwhelming to consider, especially when you’re already juggling single parenting. Here are five fundamentals that will help you take control of your financial life.
Know what you owe. Add up all your debt–student loans, mortgage, car loans, credit card balances and any other debt. You need to know how much you owe, to whom, how you’re paying it off, how long it will take to pay it off, and the interest rate you’re being charged.
Know how much you make. For a lot of people, their salary is their main income. But you may also have other income sources, such as income from a side job, tips, alimony, child support, and tax refunds. Knowing how much money is coming in to your bank account will help you understand your entire financial picture for budgeting purposes, and it will help you make sure you aren’t overpaying or underpaying on your taxes.
Know how much you spend. Just as you need to know how much is coming in, you definitely need to know how much is going out. This doesn’t mean you have to account for every penny – unless you want to! It’s enough for you to just have a broad sense of how much you’re spending in the major budget categories, such as housing, food, childcare and transportation. Once you know what you have to spend, you can create a budget so that you know how much you have left, then you can look for ways to slash your expenses and start saving!
Manage your own money. This is important for all women, and especially important for single moms. You may have had a man in your life in the past who took control of the finances – and you may have a man in your future who wants to do that, too. The truth is that women tend to live longer than men, so even in the happiest of relationships, the woman may find herself trying to make sense of a financial system she didn’t create after the man in her life is gone. And, of course, not all relationships stay in the “happy” category. You earned your money. Devise a system that makes sense to you, and then manage that system yourself.
Talk to your children about money. There is no shame in explaining your financial situation to your kids once they’re old enough to understand. Choose your words wisely because you don’t want to frighten them, but do explain your reality. When your children understand the need to be frugal, they can help you live within your means. And, learning these finance fundamentals now will set them up for their own healthy financial future.
Want some help putting together a financial plan? Ronald J. Drescher has been assisting clients with their legal and financial troubles for more than three decades.